Monopoly Overview and Concepts

These flashcards cover key vocabulary and concepts related to monopolies, their characteristics, and related economic principles.

Monopoly

A market structure where a single seller controls the entire supply of a product or service.

Price Maker

A firm that has the ability to set the market price rather than accept the market price.

Marginal Revenue (MR)

The additional revenue that will be generated by increasing product sales by one unit.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market.

Natural Monopoly

Exists when a single firm can supply the entire market at a lower cost than multiple firms due to high fixed costs.

Legal Monopoly

A monopoly that is protected by law from competition.

Allocative Efficiency

A situation in which resources are allocated in a way that maximizes the total benefit received by all members of society.

Deadweight Loss (DWL)

The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.

Patent

An exclusive legal right granted for an invention, allowing the inventor to make, use, or sell the invention for a limited time.

Intellectual Property

A category of property that includes intangible creations of the human intellect.

Profit Maximization

The process of increasing profit to the highest possible level, usually occurs when marginal revenue equals marginal cost.

Economies of Scale

Cost advantages that a business obtains due to the scale of operation, with cost per unit of output generally decreasing with increasing scale.

Price Discrimination

The strategy of selling the same product to different customers at different prices.

Competitive Response

Actions taken by firms in response to the competitive behaviors of other firms in the market.

Cartel

A formal agreement among rival firms to coordinate prices and production.

Anti-competitive Practices

Business conduct that restricts competition in the market.