15-1Mono - What is a Monopoly A monopoly is a market...

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1 Monopoly Chapter 15-1 The market structure of Monopoly What is a Monopoly? •A monopoly is a market structure in which there is a single supplier of a product. • The monopoly firm (monopolist) : – May be small or large. – Must be the ONLY supplier of the product. – Sells a product for which there are NO close substitutes. • Monopolies are fairly common: U.S. Postal Service, local utility companies, local cable providers, etc. Introduction Monopoly is a market structure in which a single firm makes up the entire market. • Monopolies exist because of barriers to entry into a market that prevent competition. The Creation of Monopolies • Monopolies often arise as a result of barriers to entry. Barrier to entry : anything that impedes the ability of firms to begin a new business in an industry in which existing firms are earning positive economic profits. • There are three general classes of barriers to entry: – Natural barriers, the most common being economies of scale
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This note was uploaded on 12/08/2011 for the course ECON 201 taught by Professor Staff during the Fall '10 term at Rio Hondo College.

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15-1Mono - What is a Monopoly A monopoly is a market...

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