ECON-Pure Monopoly

Monopoly

A market structure characterized by a single seller, producing a good or service for which there are no close substitutes, in a market with a relatively blocked entry. A monopoly is a price maker

regulated competitive price

A regulated price that is equal to the marginal cost of production. The competitive price can be found where the marginal cost curve intersects the demand curve, and it is allocatively efficient.

economies of scales

a condition in which the long-run average total cost of production decreases as production increases

regulated normal profit price

a regulated price that is equal to the average total cost of production. The normal profit price can be found where the average total cost curve intersects the demand curve

natural monopoly

an industry in which economies of scale are so extensive that the market is better served by a single firm

barriers to entry

any impediments that prevent firms from entering a market or industry

second-degree price discrimination

practice of charging different prices per unit for different quantities, or blocks, of a good or service. AKA block pricing

monopoly power

the ability of a monopoly to influence prices by controlling the quantities that it produces in the market

first-degree price discrimination

the practice of charging each and every consumer the price that she is willing and able to pay for a good or service. Also known as perfect price discrimination or personal pricing

third-degree price discrimination

the practice of dividing market participants into groups based on their elasticities of demand in order to change each group a different price for the same good or service

price discrimination

the practice of selling the same good or service to different consumers at different prices

unregulated monopoly price

the profit-maximizing price that will result from an unregulated monopolistic market

deadweight loss

the value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium

No real barriers to entry and a single firm

which of the following are characteristics of a contestable firm