Monopoly Concepts in Economics

Flashcards covering essential vocabulary and key concepts related to monopolies in economics.

Monopoly

A market structure characterized by a single seller, selling a unique product with no close substitutes.

Price Maker

A firm that has the power to set the price for its product, as opposed to a price taker.

Barriers to Entry

Obstacles that prevent new competitors from easily entering a market, allowing monopolies to maintain market power.

Marginal Revenue (MR)

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

Marginal Cost (MC)

The cost added by producing one additional unit of a product.

Total Revenue (TR)

The total receipts from sales of a given quantity of goods or services (price times quantity).

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Deadweight Loss

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

Allocatively Efficient Quantity

The quantity of output where the price equals marginal cost, maximizing total welfare.

Elastic Demand

A situation in which a change in price leads to a greater than proportionate change in quantity demanded.

Inelastic Demand

A situation in which a change in price leads to a less than proportionate change in quantity demanded.

Per Unit Tax

A tax levied on each unit of a good sold, increasing the marginal cost of production.

Lump Sum Tax

A fixed amount tax that does not change with the level of production or sales.