AP Microeconomics / Unit 4: Imperfect Competition
4.2 Monopolies
Notes
One seller, no close substitutes, high barriers to entry.
- Produces where MR = MC, charges the price on the demand curve: higher price, lower output than competition, deadweight loss.
- Natural monopoly: economies of scale make one firm cheapest.
Practice
Compared with perfect competition, a monopoly:
Market power.
A monopoly's price comes from:
Go up to demand.
Local water utilities are often:
High fixed costs.
Ready for more? Take the Unit 4 test.