What is a Monopoly ?

Basic Concepts on Monopoly with pros and cons.This also includes graphs with explanation.

1. Monopoly

2. A monopoly is a market structure in which there is only one producer/seller for a product but different customers. Monopoly

3. The important characteristics of a monopoly market

4. Disadvantages

5. A monopolist makes super normal profit, leading to unequal distribution of income (green area) Supernormal Profit

6. Productively Inefficient A Monopoly is productively inefficient as it is not on the lowest point on the AC curve.

7. Higher prices and Lower out put than a Perfect competition. This lead to a decline in consumer surplus and a deadweight welfare loss Higher prices and Lower output

8. Advantages

9. Spending on research can lead to lower costs and improved products. E.g.- Pharmaceuticals companies without monopoly power will have no incentive to research and develop better medicines. Fund high cost capital investments.

10. Increased output will lead to economies of scale which will lead to lower prices passed on to consumers. Economies of scale

11. A firm may gain monopoly power because it is most efficient. Example: Google gained monopoly through offering innovative new products Because it is most efficient

12. THANK YOU