Behavior of both a monopoly and a dominant firm

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By showing the behavior of both a monopoly and a dominant firm in the same graph, show that monopoly profits are greater than the profit of a dominant firm in the no-entry equilibrium. Show how much consumers benefit from buying from a dominant firm-competitive fringe rather than from a monopoly.

(Hint: A firm’s variable costs are the area under its marginal cost curve up to the relevant output.)

Reference no: EM13734287

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