Ch 8 - Monopoly

demand curve

is derived from the added revenue decreasing at a faster rate than price.

imperfect competition

Monopolies have ________, which indicates it has a downward sloping demand curve, where marginal revenue will be less than demand.

Monopoly firms

Tend to be price makers, as they set the price they want.

Allocative Efficiency

producing the exact amount of output that members of the society will need.

inelastic demand

Goods with ________ have less substitutes to consumers.

marginal revenue

is positive, as the prices are lowered by monopolists, which increases profits and leads to an increase in total revenue.

Elastic demand goods

provide consumers with the ability to use substitutes.

**Monopoly**

Is a market structure where one firm dominates the entire capacity of the industry, meaning that no exact substitutes for the goods and services can be offered

Resource Control

A firm which controls the resources that are needed for the production of a product

Allocative Efficiency

producing the exact amount of output that members of the society will need

**Lack of consumer surplus**

the price of goods and services depends on the highest price which consumers are capable of paying

**Monopoly**

Is a market structure where one firm dominates the entire capacity of the industry, meaning that no exact substitutes for the goods and services can be offered

High barriers to entry

Entering and exiting the market due to this monopoly is hard

**Economies of Scale**

**W**hen a firm is able to gain production advantages over its opponents by producing goods and services at a lower cost than the other firms.

**Resource Control**

A firm which controls the resources that are needed for the production of a product

**Government power**

Where the government chooses to give a singular the power of sole production to the market

**Copyrights or Patents**

The government grants sole production of a product to a singular firm

In the __elastic range__ of the demand curve

A profit maximising monopoly will be produced

In the inelastic range

Monopolists will not produce goods and services

Price Maker

A firm in the economy which has total control of the output and production of resources (goods and services)

**Allocative Efficiency**

producing the exact amount of output that members of the society will need

**Productive Efficiency**

When the production of products is being done at the lowest cost possible

Price Discrimination

Is a selling strategy which prices the same good at different prices based on what the producer believes the consumers will pay for this product.

**Natural Monopolies**

This monopoly is formed when there are high start-up costs leading to larger economies of scale, which leaves only one firm in charge of producing goods and services to this territory.