Chapter 11: Pure Monopoly

This set of flashcards contains key vocabulary terms and definitions related to the topic of Pure Monopoly, as covered in Chapter 11.

Pure Monopoly

A market structure where a single seller controls the entire market, offering a unique product with no close substitutes.

Barriers to Entry

Factors that prevent firms from entering a market, protecting existing monopolies.

Price Maker

A firm that has the ability to influence the price of its product by controlling supply.

Economies of Scale

Cost advantages that firms experience as their output increases, often leading to monopolistic control.

Natural Monopoly

A market structure where a single firm can provide a good or service at a lower cost than multiple competing firms.

Price Discrimination

The practice of charging different prices to different buyers for the same product or service, based on factors other than cost.

Monopoly Demand Curve

In a pure monopoly, this curve is the same as the market demand curve, which is typically downward sloping.

Marginal Revenue (MR)

The additional revenue earned from selling one more unit of a product, which is less than the price in a monopoly.

Regulated Monopoly

A monopoly that is subject to government regulation to control prices and ensure fair practices.

Profit Maximization

Determining the output level where marginal cost equals marginal revenue to maximize profit.

Antitrust Laws

Regulations to promote competition and prevent monopoly power abuse.

Network Effects

A situation where a product or service gains additional value as more people use it, which can create barriers to entry.

X-inefficiency

Inefficiency that occurs when firms in a monopoly do not have incentives to minimize costs.

Socially Optimal Price

A price set equal to the marginal cost of production to achieve an efficient allocation of resources.

Fair Return Price

A price set equal to the average total cost to ensure a reasonable return to the firm while preventing losses.