 I, Professor Gerald Friedman, Department of Economics, University of Massachusetts, and I'm here today to talk about monopolies and how monopolies price. Monopolies are smarter than perfect competitors. You can be smart too if you pay attention. Monopolies act thinking about the effect that they have on prices. So monopolies think about if we produce more, what will happen to the price? You can answer that. The price will go down. So monopolies think about we can sell more by producing more and lowering prices, but we will be giving discounts to everybody who was already buying our stuff. That's why monopolies don't produce where marginal cost intersects the demand curve, which is what we did for perfect competition. Monopolies produce where marginal cost equals marginal revenue, which you remember from last time, is below the demand curve. So monopolies produce at a lower marginal cost, which means that monopolies are producing less because marginal costs are rising, so to get a lower marginal cost you have to produce less. Now while monopolies are producing less, that means they're charging a higher price because you're moving up the demand curve. So monopolies charge higher prices for less. They make life worse for consumers by charging higher prices and not delivering products that people want, and they inflate business profits because they're producing at a lower cost and charging higher price, so they must be increasing their profits. So monopoly, bad for consumers, good for business, smart business for smart students. Thank you very much. Have a nice day.