Monopoly.

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Presentation transcript:

Monopoly

Characteristics One seller No close substitutes Price Searcher Overview

Profits & Barriers to Entry Natural Artificial Governmental

Monopoly Power & Price Discrimination In Theory In Practice Gainers & Losers Dumping Old people - students

How Monopoly Compared to Perfect Competition Higher Prices Less output

Is Monopoly Bad? Monopoly Losses Monopoly in the Long-Run Real World monopoly

The Costs of Monopoly Deadweight Loss Monopoly Rent Seeking Managerial Inefficiency

Facts & Fallacies About Monopoly

Facts & Fallacies About Monopoly Monopolies charge the highest possible price Monopolies always earn (high) profits Monopolists don’t have to worry about demand Monopolies charge a price higher than marginal cost Monopolists produce where demand is elastic Monopolies do not have supply curves The monopolist ultimately faces competition

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