![monopoly graph monopoly graph](https://i.ytimg.com/vi/fg08G21ZiV0/mqdefault.jpg)
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![monopoly graph monopoly graph](https://i.ytimg.com/vi/1h3TndsKNf8/maxresdefault.jpg)
A monopoly can produce more and have lower average costs. In a competitive market, firms may produce quantity Q2 and have average costs of AC2. It is assumed monopolies have a degree of economies of scale, which enables them to benefit from lower long-run average costs.
Monopoly graph Pc#
In a competitive market, the output will be at Pc and Qc.With less competition, a monopoly has fewer incentives to cut costs and therefore will be x-inefficient.By producing at Qm, the monopoly is productively inefficient (not lowest point on AC curve).Monopolies set a price greater than MC which is allocatively inefficient.However in the long-run in monopoly prices and profits can remain high.Therefore, in the long-run in competitive markets, prices will fall and profits will fall.In competitive markets barriers to entry and low – so new firms can enter the market causing lower profit.
![monopoly graph monopoly graph](http://www.businessbookmall.com/Econom100.gif)