Section 3
Monopoly Production and Pricing Decisions and Profit Outcome
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Version 3
By Boundless
By Boundless
Boundless Economics
Economics
by Boundless
5 concepts
![Thumbnail](../../../../../../figures.boundless-cdn.com/20172/square/436px-electricalgrid.jpeg)
Market Differences Between Monopoly and Perfect Competition
Monopolies, as opposed to perfectly competitive markets, have high barriers to entry and a single producer that acts as a price maker.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20201/raw/mpetition-in-the-short-run.jpg)
Marginal Revenue and Marginal Cost Relationship for Monopoly Production
For monopolies, marginal cost curves are upward sloping and marginal revenues are downward sloping.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20251/raw/mpetition-in-the-short-run.jpg)
Profit Maximization Function for Monopolies
Monopolies set marginal cost equal to marginal revenue in order to maximize profit.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20250/raw/mpetition-in-the-short-run.jpg)
Monopoly Production Decision
To maximize output, monopolies produce the quantity at which marginal supply is equal to marginal cost.
![Thumbnail](../../../../../../figures.boundless-cdn.com/20312/raw/monopoly-surpluses.jpg)
Monopoly Price and Profit
Monopolies can influence a good's price by changing output levels, which allows them to make an economic profit.