{"id":1194,"date":"2015-05-11T23:23:35","date_gmt":"2015-05-11T23:23:35","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterymicro1xngcxmaster\/?post_type=chapter&#038;p=1194"},"modified":"2015-07-13T18:05:40","modified_gmt":"2015-07-13T18:05:40","slug":"why-it-matters-10","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/chapter\/why-it-matters-10\/","title":{"raw":"Why It Matters: Monopoly","rendered":"Why It Matters: Monopoly"},"content":{"raw":"<h2>Why analyze a firm's profit maximizing strategies under conditions of a monopoly?<\/h2>\r\n[caption id=\"attachment_2154\" align=\"alignright\" width=\"164\"]<img class=\"wp-image-2154 \" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/06\/03182210\/8072157067_3aba164749_z-150x150.jpg\" alt=\"A monoplane flying above the trees in a blue sky.\" width=\"164\" height=\"164\" \/> <a href=\"https:\/\/www.flickr.com\/photos\/rob_moments\/8072157067\/in\/photolist-96dJp7-95M447-anzwSA-dVva6h-95J19D-8z1fPc-89aoAS-kyfNnw-95HYva-91jvSk-95HZjV-95HYN2-95HZ5i-95HZAi-7PMoff-4aw9Mq-b7yW8e-4onmTB-LdMSN-pbUt3p-954mpz-8z1fw4-82jZsE-6KNFQP-6KSKof-sKccaA-th9AUa-sKckeS-sKchc9-s5YfCB-cPTcau-95M3qb-oVmAVj-diiV4R-9cvGh5-9ciRJx-b7XvhB-6kYFUJ-6kUxj4-6kYFdA\" target=\"_blank\">Monoplane<\/a> by Robert Payne, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\" target=\"_blank\">CC-BY<\/a>.[\/caption]\r\n\r\nIf perfect competition is at one end of the competitive spectrum, at the other end is monopoly. \u00a0Mono means one. A monoplane is an aircraft with one wing. A monocle is a single eyeglass. Monopoly is a single supplier, the only firm in an industry. Monopolies have monopoly power, which is the ability to set the market price.\r\n\r\nAs you work through this module, think about the following questions:\r\n<ul>\r\n\t<li>What prevents a monopoly from charging an infinite price?<\/li>\r\n\t<li>What is similar about the model of monopoly compared to perfect competition?<\/li>\r\n\t<li>What is different about the model of monopoly compared to perfect competition?<\/li>\r\n<\/ul>\r\nThere are more industries which are monopolies than are perfectly competitive, but examples of pure monopoly are still hard to find in the U.S.. \u00a0Google is not a monopoly. Nor is Microsoft or Amazon.com. \u00a0Still we can learn a lot about how those firms operate by understanding the model of monopoly. Your local power company is a monopoly, but it doesn\u2019t operate exactly the way this module explains. \u00a0How do we explain this anomaly? Let\u2019s find out.\r\n<div><iframe src=\"https:\/\/s3-us-west-2.amazonaws.com\/textimgs\/Why+It+Matters\/Microeconomics\/Microeconomics_Competency_10\/index.html\" width=\"573\" height=\"358\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\">&lt;br \/&gt;<\/iframe><\/div>\r\n<h3>LEARNING OUTCOMES<\/h3>\r\n<ul>\r\n\t<li>Define the characteristics of a monopoly<\/li>\r\n\t<li>Define and explain the sources of barriers to entry<\/li>\r\n\t<li>Calculate and graph a monopoly's fixed, variable, average, marginal and total costs<\/li>\r\n\t<li>Explain why a monopoly is inefficient using deadweight loss<\/li>\r\n\t<li>Analyze different strategies to control monopolies, including natural monopolies<\/li>\r\n<\/ul>","rendered":"<h2>Why analyze a firm&#8217;s profit maximizing strategies under conditions of a monopoly?<\/h2>\n<div id=\"attachment_2154\" style=\"width: 174px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-2154\" class=\"wp-image-2154\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images-archive-read-only\/wp-content\/uploads\/sites\/1295\/2015\/06\/03182210\/8072157067_3aba164749_z-150x150.jpg\" alt=\"A monoplane flying above the trees in a blue sky.\" width=\"164\" height=\"164\" \/><\/p>\n<p id=\"caption-attachment-2154\" class=\"wp-caption-text\"><a href=\"https:\/\/www.flickr.com\/photos\/rob_moments\/8072157067\/in\/photolist-96dJp7-95M447-anzwSA-dVva6h-95J19D-8z1fPc-89aoAS-kyfNnw-95HYva-91jvSk-95HZjV-95HYN2-95HZ5i-95HZAi-7PMoff-4aw9Mq-b7yW8e-4onmTB-LdMSN-pbUt3p-954mpz-8z1fw4-82jZsE-6KNFQP-6KSKof-sKccaA-th9AUa-sKckeS-sKchc9-s5YfCB-cPTcau-95M3qb-oVmAVj-diiV4R-9cvGh5-9ciRJx-b7XvhB-6kYFUJ-6kUxj4-6kYFdA\" target=\"_blank\">Monoplane<\/a> by Robert Payne, <a href=\"https:\/\/creativecommons.org\/licenses\/by\/2.0\/\" target=\"_blank\">CC-BY<\/a>.<\/p>\n<\/div>\n<p>If perfect competition is at one end of the competitive spectrum, at the other end is monopoly. \u00a0Mono means one. A monoplane is an aircraft with one wing. A monocle is a single eyeglass. Monopoly is a single supplier, the only firm in an industry. Monopolies have monopoly power, which is the ability to set the market price.<\/p>\n<p>As you work through this module, think about the following questions:<\/p>\n<ul>\n<li>What prevents a monopoly from charging an infinite price?<\/li>\n<li>What is similar about the model of monopoly compared to perfect competition?<\/li>\n<li>What is different about the model of monopoly compared to perfect competition?<\/li>\n<\/ul>\n<p>There are more industries which are monopolies than are perfectly competitive, but examples of pure monopoly are still hard to find in the U.S.. \u00a0Google is not a monopoly. Nor is Microsoft or Amazon.com. \u00a0Still we can learn a lot about how those firms operate by understanding the model of monopoly. Your local power company is a monopoly, but it doesn\u2019t operate exactly the way this module explains. \u00a0How do we explain this anomaly? Let\u2019s find out.<\/p>\n<div><iframe loading=\"lazy\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/textimgs\/Why+It+Matters\/Microeconomics\/Microeconomics_Competency_10\/index.html\" width=\"573\" height=\"358\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\">&lt;br \/&gt;<\/iframe><\/div>\n<h3>LEARNING OUTCOMES<\/h3>\n<ul>\n<li>Define the characteristics of a monopoly<\/li>\n<li>Define and explain the sources of barriers to entry<\/li>\n<li>Calculate and graph a monopoly&#8217;s fixed, variable, average, marginal and total costs<\/li>\n<li>Explain why a monopoly is inefficient using deadweight loss<\/li>\n<li>Analyze different strategies to control monopolies, including natural monopolies<\/li>\n<\/ul>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-1194\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: Steven Greenlaw and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><li>Monopoly Interactive. <strong>Authored by<\/strong>: Clark Aldrich and Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":969,"menu_order":1,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"\",\"author\":\"Steven Greenlaw and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"original\",\"description\":\"Monopoly Interactive\",\"author\":\"Clark Aldrich and Lumen Learning\",\"organization\":\"\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"8c306a82-6244-4d96-8959-c93dd52d4ccf","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-1194","chapter","type-chapter","status-publish","hentry"],"part":30,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/users\/969"}],"version-history":[{"count":9,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1194\/revisions"}],"predecessor-version":[{"id":3926,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1194\/revisions\/3926"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/parts\/30"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapters\/1194\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/media?parent=1194"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/pressbooks\/v2\/chapter-type?post=1194"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/contributor?post=1194"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/atd-herkimer-microeconomics\/wp-json\/wp\/v2\/license?post=1194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}