Chapter 15
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The deadweight loss associated with a monopoly occurs because the monopolist
Produces an output level less than the socially optimal level
If a pharmaceutical company discovers a new drug and successfully patents it, patent law gives the firm
Sole ownership of the right to sell the drug for a limited number of years
A government-created monopoly arises when
The government gives a firm the exclusive right to sell some good or service
Without price discrimination, the monopolist sells every unit at the same price. As a consequence,
Price is greater than marginal revenue
Monopolies use their market power to
Charge a price that is higher than marginal cost
