00:01
So here we're thinking about market structure, so let me draw market, right? a market is characterized by quantity and price.
00:10
It's got a, that's not my best p, a downward sloping demand curve, and i'm going to assume the same unit costs, right? so i'm going to assume that there's a marginal cost curve like this, right? so first of all, i want to talk about competition, right? this is the competitive equilibrium.
00:30
It's where marginal benefit is equal to marginal cost, right? so in competition, we have, right, competitive price, competitive quantity, and we have zero profits.
00:46
So competition has the following.
00:51
It has price, pc, quantity, qc, profits are zero, right? profits are zero because, right, price is equal to marginal cost.
01:05
There's no profit margin, right? there's no room for a firm to make a profit here.
01:10
All the profits are driven out by competition.
01:15
Allocation of resources.
01:20
Allocation here is what i would call efficient, right? efficient, and by what i mean by that is that there's no deadweight loss, right? no dead weight loss.
01:35
And finally, in terms of income transfers, i would say there's tons of consumer surplus.
01:41
Because there's this massive consumer surplus triangle that results.
01:45
But in a monopoly case, a monopoly has this marginal revenue curve.
01:52
And so the monopoly wants to set marginal revenue is equal to marginal cost...