Chapter 8: Pure Monopoly

These flashcards cover key concepts and terms related to pure monopoly as discussed in Chapter 8 of the lecture notes.

Pure Monopoly

A market structure characterized by a single seller that controls the entire supply of a product or service.

Price Maker

A firm that has the ability to influence the price of the product it sells.

Barriers to Entry

Factors that prevent new competitors from easily entering a market.

Monopoly Demand Curve

The demand curve for a monopolist, which is downward sloping, indicating that to sell more units, the monopolist must lower the price.

Marginal Revenue

The additional revenue gained from selling one more unit of a product, typically less than the price in a monopoly.

Price Discrimination

The practice of charging different prices to different customers for the same product, not based on cost differences.

Economies of Scale

The cost advantages that firms obtain due to the scale of operation, with cost per unit of output generally decreasing with increasing scale.

X-inefficiency

The inefficiency that occurs when a firm with market power does not operate at minimum average cost due to lack of competitive pressure.

Antitrust Laws

Legislation enacted to prevent new monopolies from forming and to break up those that already exist.

Public Utility

A company that provides essential services such as water, electricity, or gas, which often operates as a monopoly.