Monopoly arises when there are

 14.1   Explain how monopoly arises and distinguish between single-price monopoly and price-discriminating monopoly.

 14.2   Explain how a single-price monopoly determines its output and price. 

 14.3   Compare the performance of single-price monopoly with that of perfect competition.

 14.1   Explain how monopoly arises and distinguish between single-price monopoly and price-discriminating monopoly.

A.  A monopoly is a market with a single supplier or a good or service that has no close substitutes and in which legal or natural barriers to entry prevent competition.
B.  A monopoly can price discriminate when there is no resale possibility.
C.  Where resale is possible, a firm charges a single price.

 14.2   Explain how a single-price monopoly determines its output and price.

A.  A monopoly's demand curve is the market demand curve and a single-price monopoly's marginal revenue is less than price.
B.  A monopoly maximizes profit by producing the output at which marginal revenue equals marginal cost and by charging the maximum price that consumers are willing to pay for that output.

 14.3  Compare the performance of single-price monopoly with that of perfect competition.

A.  A single-price monopoly charges a higher price and produces a smaller quantity than a perfectly competitive market and creates a deadweight loss. 
B.  Monopoly imposes a loss on society that equals its deadweight loss plus the cost of the resources devoted to rent seeking.

Take the optional post-study bonus point quizzes on Monopoly on Saturday following Module 8.

Take the optional pre-study bonus point quizzes on Monopolistic Competition on Sunday preceding Module 9.

The National Center of Policy Analysis (NCPA) is a nonprofit, nonpartisan public policy research organization, established in 1983. The NCPA's goal is to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector. Topics include reforms in health care, taxes, Social Security, welfare, criminal justice, education and environmental regulation