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Ap Econ Mono

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Ap Econ Mono

  1. 1. Monopoly Ch. 15: firm behavior and the organization of industry
  2. 2. What is monopoly? <ul><li>only one seller of a certain product that does not have close substitutes </li></ul><ul><li>no free entry </li></ul>
  3. 3. Monopoly Resources <ul><li>monopoly can emerge when one firm owns an essential resource </li></ul><ul><li>much greater market power </li></ul>
  4. 4. Government created monopolies <ul><li>gains the right to sell a good or service from the government </li></ul><ul><li>ie. The patent and copyright laws </li></ul><ul><li>higher prices than competition </li></ul><ul><li>encourage creative activity </li></ul>
  5. 5. Natural Monopolies <ul><li>natural monopoly: when one firm can supply a good or service to an entire market at lower cost </li></ul><ul><li>ie. Distribution of water </li></ul><ul><li>the size of the market = determinant </li></ul><ul><li>as it gets bigger, becomes a competitive market </li></ul>

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