Price and costs (dollars per unit) 74'551880 3 21 2 $8 million. $16 million. If an average cost pricing rule is imposed on the natural monopoly shown in the figure above, then consumer surplus will be $9 million. MR $0. LRAC MC 3 5 6 Quantity (millions of units)

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Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market value of the homogenous product. This structure of the market is called perfect competition.