Monopoly Flashcards
1
Q
What is a Monopoly
A
a market in which there is only one seller and there are many buyers. It refers to a market structure with no competition. The main reason is that
there are barriers preventing new firms from entering that industry. As such, monopoly firms are usually large-scaled producers as they supply the entire market.
2
Q
Features of monopoly
A
-only one firm and it controls the market
- almost impossible for new firms to enter the market
- monopolist is a price maker, setting the market price
- make abnormal level of profits
- they can restrict the quantity of goods they supply in order to raise prices and make profit
3
Q
Due to barriers of entry
A
the firm is able to enjoy abnormal profits in the short and
long run.
