Chapter 10: Pure Monopoly
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Last updated 9:48 PM on 6/16/22
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10 Terms
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Pure monopoly
Single firm is sole producer of product w/ no close substitutes
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Barriers to entry
Factors that prohibit firms from entering industry
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Simultaneous consumption
Product’s ability to satisfy large # of consumers at same time
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Network effects
Value of product to each user increases as total number of users increases
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X-inefficiency
Firm produces output at higher cost than necessary to produce
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Rent-seeking behavior
Activity designed to transfer income/wealth to a firm/resource supplier at someone else’s expense
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Price discrimination
Selling a specific product at more than one price when the price differences are not justified by cost differences
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entry
Blocked ________- No potential competitors can enter industry.
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Socially optimal price
Allocative efficiency; P = MC
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Fair-return price
Permits fair return to firm owners; P = ATC
