Week 11 - Competition Flashcards
1
Q
Define a monopoly
A
Firm that is the sole seller of a product without close substitutes. Monopolies believe they can choose any point from a demand curve.
2
Q
What causes a monopoly
A
Caused by barriers to entry (ownership of key resources is another way).
3
Q
What is a natural monopoly
A
Arises when a single firm can supply a product for a lower cost than more than one firm (for example, water)
