Unit 9 Monopoly - Microeconomics

Monopoly

A sole supplier of a product with no close substitutes.

Barrier to Entry

Any impediment that prevents new firms from entering an industry and competing on an equal basis with existing firms. 

Patent

A legal barrier to entry that grants the holder the exclusive right to sell a product for 20 years from the date the patent is filled.  

Innovation

The process of turning an invention into a marketable product.

Economies of Sale Monopoly

Sometimes a monopoly occurs when a firm experiences economies of scale, as reflected by a downward sloping long run average cost.

Price Maker

A firm must find the profit maximizing price when the demand curve for its output slopes downward.

Deadweight Loss of Monopoly

Net loss to society when a firm uses its market power to restrict output and increase price.

Rent Seeking

Activities undertaken by individuals or firms to influence public policy in a way that will increase their incomes.

Price Discrimination

Increasing profit by charging different groups of consumers different prices for the same product.

Perfect Price Discrimination

Charing a different price for each unit sold.