Chapter 10: Pure Monopoly

Single firm is sole producer of product w/ no close substitutes

Factors that prohibit firms from entering industry

Product’s ability to satisfy large # of consumers at same time

Value of product to each user increases as total number of users increases

Firm produces output at higher cost than necessary to produce

Activity designed to transfer income/wealth to a firm/resource supplier at someone else’s expense

Selling a specific product at more than one price when the price differences are not justified by cost differences

Blocked ________- No potential competitors can enter industry.

Allocative efficiency; P = MC

Permits fair return to firm owners; P = ATC