10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21 22. 23. 24. 25. 26. 27. H HHHHHHHHH '11 '11'11'1'1'1'1'11PHH1H1'11 "11'1'1 In the long nm, a perfectly competitive rm may incur economic losses. In the long run, a perfectly competitive rm behaves like a price maker. In the long run, a perfectly competitive firm produces at the point where P 2 MR 2 minimum AT C. A perfectly competitive market is characterized by homogeneous products. Monopolists maximize prots by changing prices that equal marginal revenue. In maximizing prots monopolists do not follow the MC 2 MR rule. There are signicant barriers to entry in monopoly markets. In the long mm, monopolies earn zero economic profits. Monopolists always charge prices that exceed their average total cost. Monopolies may result from economies of scale. A monopoly typically produces less than a perfectly competitive firm. If the American school system adopted a system of vouchers, public schools would face additional competition from private schools. Established airlines have benefited from barriers to entry in the form of restricted access to takeoff and landing slots at many large airports. Diseconomies of scale have contributed to the natural monopoly status of many public utilities. DeBeers is an example of a perfectly competitive rm in the diamond industry. The U.S. Postal Service has an exclusive franchise to deliver all package mail in the United States. Concerning the U.S. airline industry, research has shown that when the market share of the dominant airline falls, fares tend to increase. If Northern States Power Co. is a natural monopoly, its long run average total cost curve is upward sloping