III. Some Monopolies Make No Profit.  
     A. Rising costs and shrinking demand may result
          in a monopoly not making a profit.  
     B. When this happens, demand (average revenue)
          is always below the ATC and a loss results.

IV. Some Monopolies are Regulated.
      A. If demand is inelastic, profit may be excessive.
      B. Price Discriminating Monopoly Micro in 60 seconds
      C. Government regulates with antitrust laws, government
           ownership, and limiting profit by restricting price to ATC.
       D. M is the where monopoly maximizes profits.
       E. Regulated price R yields a normal return.
       F. E is the economically optimum price.
       G. Econ in 60 Seconds Video: Regulating a Monopoly
 

II. Most Monopolies Make a Profit.
    A. ATC includes normal return on investment.
    B. MC cuts ATC at lowest point.
    C. Profit is maximized by producing a quantity and charging a price
         indicated by the intersection of MC and MR.
    D. The resulting profit is not a payment for enterprise, it is economic
         rent which should not exist in pure capitalism.
        

         1. Economic Rent
         2. Rent Seeking
         3. Economic Rent Video 7:47

E. High inelastic demand will result in a higher price, greater profit,
      and more restricted (smaller) quantity.
F. Econ in 60 Seconds Video on Mmonopoly Graph Review

V. Economic Analysis of Monopoly
       A. With pure competition
            1. P = MR = MC
            2. Production is at the lowest point on ATC curve.
       B. With Monopoly  
           1. P > MR = MC
           2. Production is not at the lowest point indicated
               by the ATC curve 
           3. Quantity produced is restricted.
       C. A monopoly is a price maker.
       D. Are monopolies inefficient
            1. There are many inefficiencies.
                a. Lack of competition makes monopolies
                   wasteful as nothing forces efficiency.
               b. Advertising just to enhance barriers to entry.
               c. Litigate to protect monopoly power
               d. Active politically to protect monopoly power
           2. Large scale efficiencies
               a. Bigness creates efficiencies (economies of  
                   scale) causing the ATC curve to be below
                   that of pure competition.
               b. Creates the necessary profit and profit potential
                   required for investors to assume the risk associated
                   with large capital investment requirements including
                   ever-increasing R & D expenditures.
       E. Additional Materials
            1. When Monopoly Wasn't A Game. 
            2. 2012 AP Econ Video-We're a Monopoly, Arab Money
            3.Big 2002 recording stars exhibit monopoly power Source The Big Picture
            Paul McCartney, $103.3 million
               The Rolling Stones, $87.9 million
               Cher, $73.6 million
               Billy Joel/Elton John, $65.5 million
               Dave Matthews Band, $60.1 million
               Bruce Springsteen & the E Street Band, $42.6 million
               Aerosmith, $41.4 million
               Creed, $39.2 million
               Neil Diamond, $36.5 million
              The Eagles, $35.4 million