Economics 1021A/B Chapter Notes - Chapter 13: Monopoly Price, Deadweight Loss, Economic Surplus

• School: Western University
• Department: Economics
• Course: Economics 1021A/B
• Professor: Bruce Hammond

Document Summary

Monopoly = a market with a single firm that produces a g or s for which no close substitute exists and that is protected by barriers that prevent other firms from selling that g or s. Natural barriers one firm can supply the entire market at a lower price than two or more firms can: creates a natural monopoly, e. g. gas, water, electricity. Information age monopolies: 4 big natural monopolies: microsoft, google, ebay, internet explorer, they have 0 mc, so experience economies of scale. Ownership barrier one firm owns a significant portion of a key resource. A monopoly sets its own price, hence faces a market constraint: Two pricing strategies: single price, and price discrimination. Single-price monopoly sell each unit for the same price to all customers. Since only one firm, the demand curve for firm is the demand firm for market.