... structure (here I'll show the comparison between the PC and pure monopoly). Since all firms' objective is ? maximisation, MC=MR for all firms (, ). So, under the PC firms are price-takers and, hence, price plays a role of constraint:. As MC=MR, MC=P, in other words, under the PC firms always operate where P=MC. However, under monopoly, firms are price-makers, what implies that price doesn't play a role of constraint and relationship between P and Q is given by Market Demand Curve. So, . Hence, . This formula stresses the idea that under monopoly firms always operate where demand is elastic (>1), but they don't produce where =, as in the case with PC, hence, 1<1, P>MC. This implies that, in comparison to PC, a monopoly produces a lower output at a higher price. The graph printed below proves this statement. P PM>PC=MC S(MC) QM

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