monopoly

Monopolies: A pure monopolist is a single seller of a product in a given market or industry. In simple terms this means the firm has a market share of 100%. A monopolist is able to make abnormal profits in the long run as "Barriers to entry" exist.

The monopolist faces a downwards sloping demand curve, it can therefore set price or quantity, but not both. The demand curve would be relatively price inelastic as the monopolist does not face competition, but of course this would depend upon the type of product it is selling. For example if you had a monopoly on drinking water, the demand curve would be steeper than if you had a monopoly on hamburgers. A monopoly can make abnormal profits in the long run but you should also understand that it could also just make normal profits in the long run (although this is statistically improbable). It is also possible for a monopolist to make a loss in the short run. 



 Monopolies and Barriers to entry



And another revision presentation for those students keen to go the "extra yard". this looks at some real life examples of barriers to entry. media type="custom" key="15520910"

Monopolies and efficiency (see here also)

Consumer surplus and price discrimination 

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<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">[|Extension task: Revision notes on use of consumer and producer surplus to measure efficiency]

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Extension reading: regulating natural monopolies <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px; line-height: 0px; overflow: hidden;">

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