In the U.S., for approximately the past 100 years, it has been the policy of the U.S. government to prevent firms from obtaining enough share of a market to act as a monopolist.
- What is the benefit to society of limiting a firm's ability to act as a monopolist? Please use a market model and a set of short-run cost curves to support your answer. In particular, show how a firm maximizing profits in a monopoly market is different from a firm participating in a competitive market. Note: if possible use the concepts of consumer and producer surplus in your answer.
- Is the monopoly firm seeking different ends than a perfectly competitive firm? Why or why not?