monopoly is a market structure where a single firm dominates the industry and has significant market power. Understanding monopolies is essential in

What is a monopoly?

A market structure where a single firm dominates the industry and has significant market power.

What are the characteristics of a monopoly?

Single Seller, High Barriers to Entry, Price Maker, Supernormal Profits in the Long Run, Lack of Close Substitutes.

What defines a legal monopoly according to the UK Competition and Markets Authority?

A firm having more than 25% market share.

What are the two types of monopolies?

Pure Monopoly (100% market share) and Legal Monopoly (more than 25% market share).

What is a barrier to entry in the context of monopolies?

Factors that prevent new firms from entering the market.

List some sources of monopoly power.

Economies of Scale, Legal Barriers (patents, licensing), Brand Loyalty, Anti-Competitive Practices.

How does a monopolist's demand curve behave?

It is downward-sloping because the monopolist is the sole seller and must lower prices to sell more.

What is the profit maximization condition in a monopoly?

A monopoly maximizes profit where Marginal Cost (MC) equals Marginal Revenue (MR).

Why is a monopoly considered productively inefficient?

Because it does not operate at the lowest cost (MC ≠ AC).

What is allocative efficiency?

When the price (P) equals marginal cost (MC), which monopolies fail to achieve, leading to higher prices.

What are some advantages of a monopoly?

Economies of Scale, Investment in R&D, International Competitiveness, Stable Employment.

What are some disadvantages of a monopoly?

Higher Prices, Lower Output, Limited Consumer Choice, Productive & Allocative Inefficiency.

Compare market power in a monopoly vs perfect competition.

Monopoly has high market power (Price Maker), while perfect competition has none (Price Taker).

What methods do governments use to regulate monopolies?

Price Capping, Profit Regulation, Quality Standards, Breaking Up Monopolies, Deregulation.

Give an example of a real-world monopoly.

Google, which dominates the search engine market with ~90% market share.

What was Microsoft accused of in the 1990s?

Abusing monopoly power in operating systems.

Why is it important to understand monopolies in AQA A-Level Economics?

They are key concepts often tested in essays and exams.