EC120 Chapter Notes - Chapter 15: Monopoly Profit, Natural Monopoly, Market Price
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EC120 Full Course Notes
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A firm that is the sole seller of a product without close substitutes. No close competitors can influence the market price of its product. Monopoly resources: a key resource is owned by a single firm. Government-created monopolies: gives a single firm the exclusive right. Natural monopolies: produce output at a lower cost. Single firm to own a key resource very inelastic monopoly can rise the price. Monopolies rarely arise for this reason, few examples of firms that own a resource for which there are no close substitutes. Government has given one person/firm the exclusive right to sell some good or service. Government do so because they view it to be in the public interest. The patent and copyright laws are two examples of how the government creates a monopoly. A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms.
