Chapter 13 - Chapter 13 Monopoly Monopoly and How It Arises...

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Chapter 13: Monopoly: Monopoly and How It Arises Monopoly: A market with a single firm that produced a good or service for which no close substitute exists and that is protected by a barrier that prevents other firms from selling that good or service Barriers may be legal (public franchise, license, patent, copy right, firm owns control of a resource) or natural (economies of scale) A monopoly might be able to price discriminate when there is no resale possibility Where resale is possible, a fir charges one price A Single-Price Monopoly’s Output and Price Decision A monopoly’s demand curve is the market demand curve and a single price monopoly’s marginal revenue is less than price A monopoly maximizes profit by producing the output at which the marginal revenue equals marginal cost and by charging the maximum price that consumers are willing to pay for that output Single- Price Monopoly and Competition Compared
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