See how a monopolist restricts output and raises price — and the deadweight loss that market power creates.
See how a monopolist restricts output and raises price, and why that creates deadweight loss.
Switch the market structure from Perfect competition to Monopoly.
Before you act, predict what will happen. What happens to the quantity produced and the price charged? Then do it — did your prediction match what happened?
Price, output, and deadweight loss
A monopolist sets marginal revenue equal to marginal cost — producing less and charging more than perfect competition (price = marginal cost). The shaded triangle is the lost surplus.