What’s wrong with monopoly?
w
A perfectly competitive industry
would choose Q
c
where D = MC.
$/Q
Q/t
D=AR
MC=AC
Q
c
P
c
w
Economic profit would be zero.
w
Shaded area is consumers’ surplus.
Consumer’s
surplus is the
difference
between what
the consumer is
willing to pay
and what he or
she has to pay.
