Topic 15: What is a Monopoly?

The characteristics of monopoly are barriers to enter the market, sells products that are unique to only that market, and there are no close substitutes to the products of that monopoly. The monopoly market has more to decide on the price and how much to produce because they have no competition. They try to find the best point that maximizes their profit. If they set the price too high, then less consumers will buy (if the product is not a necessity). Therefore, they need to decide on a price that will maximize their profit. The benefit of a monopoly is that they have no competition and all the customers have to buy the products from that specific company. The costs is that monopolies are actually very inefficient and creates deadweight loss. The economists are concerned with the inefficiency of monopolies. I do agree with the the economists' view of efficient monopolies. Monopoly can be a good thing when it comes to advantage in mass production and manufacturing. If a monopoly spends all its surplus to maintain the position, then it is not worth it to attain a monopoly. The resource that could be used for other things are wasted. This creates a huge opportunity cost.