You are on page 1of 4

Monopoly

refers to a market situation where there is only one seller or producer supplying
unique goods and services.
it is a single seller who has a complete control over a specific industry
there is nobody else selling anything like what the monopolist is producing.
there is no close substitute.
Under monopoly, the consumer has only 2 choices:
buy the monopolists product or none at all
Characteristic:
single seller or producer
unique product or service
impossible entry into the market

Single seller or producer


monopoly market is comprised of a single supplier selling to a multitude of
small, independently-acting buyer.
monopoly means a single firm is the industry
one firm provides the total supply of a product in a given market
Unique product
there is no close substitutes for the monopolists product
Impossible entry
barriers to entry are so severe so that it is impossible for new firms to
enter the market
barriers to entry may include:
sole ownership of a vital resource
legal barriers like government franchises and licenses
economies of scale

Other characteristics:
monopolist dictates the price of his commodities
no need for an extensive advertising or sales promotion

Output

Price

TR

MR

TC

ATC

MC

16

16

16

20

20

15

30

14

30

15

10

14

42

12

36

12

13

52

10

42

10.50

12

60

50

10

11

66

63

10.60

13

10

70

84

12

21