ECON 1000 Chapter Notes - Chapter 13: Deadweight Loss, Monopoly Price, Economic Surplus

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: Avi Cohen

Document Summary

Monopoly = market with a single firm that produces a good/service for which no close substitute exists & that"s protected by a barrier preventing other firms from selling that good/service. Arises from: no close substitute & barrier to entry. 3 types of barrier to entry (natural, ownership, legal) Natural barrier to entry creates natural monopoly = market in which economies of scale enable 1 firm to supply the entire market at the lowest possible cost (e. g. firm"s deliver water, gas to our homes) Ownership barrier to entry = 1 firm owns a significant portion of a key resource. Legal barrier to entry creates legal monopoly = market in which competition & entry are restricted by granting of a public franchise, govt license, patent or copyright. Public franchise = exclusive right granted to a firm to supply a good/service. Govt license = control entry into particular occupations, professions & industries. Patent = exclusive right granted to inventor of a product/service.