Social Sciences and History / Unit 13 SSH 1238 short lesson, about 20 seconds
Monopoly's Two Inefficiencies
Captions available
The idea
The monopolist produces where marginal revenue equals marginal cost and charges the demand curve's price there. It is not productively efficient, since it does not produce at minimum average cost, and not allocatively efficient, since price exceeds marginal cost: less output, higher price.
In practice
Weak incentive to innovate, no entry to fear.
Where people slip
Deregulation removes controls on prices and quantities.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Something wrong in this lesson? Flag it