LEARNING OUTCOMES
After studying this chapter, you will be able to
- List three barriers to entry and explain how each can help create market power
- Distinguish marginal revenue and average revenue for a monopolist, and explain why marginal revenue is less than average revenue
- Determine the profit-maximizing or loss-minimizing production level for a monopolist
- Summarize what causes the deadweight loss of monopoly
- Outline the factors that could cause the deadweight loss of monopoly to be lower or higher than expected
- Explain why a firm with market power might decide to charge different groups different prices
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AN INTRODUCTION TO MONOPOLY
- A monopoly is the sole supplier of a product with no close substitutes.
- There is only one supplier in the market but there are many demanders, so many that no buyer has any control over the price.
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Why do some markets come to be dominated by a single supplier?
A monopolized market is characterized by barriers to entry, which are restrictions on the entry of new firms into an industry.
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BARRIERS TO ENTRY
- Legal Restrictions
- Patents and Invention Incentives
- Licenses and Other Entry Restrictions
- Economies of Scale
- Control of Essential Resources
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A single study is never the end of the story; multiple studies are needed before we can reach defensible conclusions about social phenomena.
Special thanks to
Mahasiswa Agribisnis Angkatan '21
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