monopoly

• What is the term for a market with a single seller?

  Monopoly
• What is a characteristic of a monopoly regarding market entry?

  High barriers to entry
• What is the term for the price set by a monopolist?

  Monopoly price
• What is the effect of economies of scale in a monopoly?

  Lower average costs with increased production
• How does government regulation affect monopolies?

  It can limit prices and market power
• What is meant by supernormal profit?

  Profit above normal profit levels
• What is the relationship between marginal cost and average cost in a monopoly?

  Marginal cost can be constant
• What is the implication of switching costs for consumers?

  It can prevent them from changing suppliers
• How does a monopoly affect consumer welfare?

  It typically reduces consumer welfare
• What is the significance of dynamic efficiency in a monopoly?

  It relates to innovation and long-term growth
• What are the key characteristics of a monopoly?

  • Single seller in the market
  • High barriers to entry
  • Price maker
  • Potential for supernormal profits
  • Lack of close substitutes
• What are the implications of economies of scale in monopolistic markets?

  • Lower average costs with increased output
  • Can lead to market dominance
  • May discourage new entrants
• What are the effects of government regulation on monopolies?

  • Can limit pricing power
  • May enforce fair competition
  • Can prevent abuse of market power
• How do switching costs impact consumer behavior in monopolistic markets?

  • Create reluctance to change suppliers
  • Can lock consumers into contracts
  • May reduce competition
• What is the difference between normal profit and supernormal profit?

  • Normal profit: minimum required to stay in business
  • Supernormal profit: exceeds normal profit
• How does a monopoly affect market efficiency?

  • Can lead to allocative inefficiency
  • May result in productive inefficiency
  • Often reduces overall welfare