TOPIC 1

One key component to determining a firms profit is identifying the point where MC = MR. That is how you determine the quantity of production that allows a firm to maximize profit or minimize loses. This is true for every type of company, regardless of the level of competition they face. However, the MC and MR will have different properties and characteristics firm to firm.

Monopolies still occur but are far less common than competitive industries.

• Give an example of a company that closely resembles a Monopoly.

Monopolies and Perfectly Competitive markets have different characteristics that impact their abilities to make profit. Most notably their Marginal Revenues have different characteristics.

• How is marginal revenue different between Perfect Competition and a Single-Price Monopoly? What causes the difference?

TOPIC 2

Assume we have two Long-Run situations to compare. First, think about a product produced by a Perfectly Competitive firm. Second, think about what would happen if that industry transformed into one where a Monopoly produced the product. (Ex. One company took ownership of all the others)

In each situation, what happens to each companies profit in the long-run? Why?

Which situation would be best for consumers? Why?

Would either situation be more or less efficient than the other?