Market forms and pricing strategies

Price is set differently in different markets. Under perfect competition, the firm takes the market price and sells all it can at that price. Under monopoly, one firm sets the price, restricted only by demand. Worked example: a monopolist facing demand P = 100 − 2Q has total revenue 100Q − 2Q², so marginal revenue is 100 − 4Q — it falls twice as fast as price, which is why a monopolist always restricts output below the competitive level.