Chapter
23
Monopoly
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
23­1
Chapter
Objectives
The
graph
of
the
monopolist
How
monopolist’s
profits
are
calculated
The
monopolist
in
the
short
run
and
long
run
Barriers
to
entry
Limits
to
monopoly
power
Economies
of
scale
and
natural
monopoly
What
makes
bigness
bad?
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
23­2
Monopoly
Defined
A
monopoly
is
the
ONLY
firm
in
an
industry
No
one
else
sells what
the
monopolist
is producing
There
are local
monopolies
Some examples are a hardware store, a dry cleaners, and a
drugstore
There
are national/regional
monopolies
Some examples are diamonds dealers, gas and
electric
companies, and local phone companies
A
monopoly
produces
ALL
the
output
in
an
industry
There
are
no
close
substitutes
for
the
product
or
service
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
23­3