00:01
Assuming that firms maximize profits, how will the price and output policy of an unregulated monopoly compare with the ideal market efficiency? output too large, price too high.
00:13
Output too large, price too low.
00:15
Output too small, price too high, or output too small, price too low.
00:19
So we are maximizing profits here, and we don't have to worry about the actions of competitors, because this is a monopoly.
00:30
So, for example, what would happens to the price? well, we can put the price as high as we like and it won't be undercut by competitors.
00:38
It could only be undercut by people stopping to buy the product, stop buying the product.
00:44
So the price is going to be as high as we can get away with.
00:50
Any higher people stop buying it.
00:53
So that rules out a couple of the options...
