What’s wrong with monopoly?
w
Monopoly restricts output and raises price
relative to the competitive benchmark.
MR
$/Q
Q/t
D=AR
MC=AC
Q
c
Q
m
P
c
w
As a result, some potentially beneficial
gains from trade don’t take place.
P
m
w
Total surplus is diminished by the
extent of
the
deadweight-loss triangle
.
Total (social)
surplus is CS + PS.
CS
PS
DWL
