1 Monopoly Micro Ch 15 a Exact opposite of perfect competition b A firm is the sole seller of a product without close substitutes c Market power the ability to influence the market price i Main cause of market power is barriers to entry ii 3 sources 1 A single firm owns a key resource a Ex DeBeers owns 90 of all diamond mines 2 The government gives exclusive rights to produce the good 3 Natural monopoly a single firm can produce the entire market at a lower cost a Large FC b Small MC c Ex 1000 homes need electricity refer to notes d Monopolist isn t a price taker they are a price maker 2 Price Discrimination a Sell the same good at same place different prices to different buyers i Example Movie airlines clubs 1 Day night 2 Senior b Perfect price discrimination i Ex airlines
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