Question

What is Monopoly? What are its main features?

Hint:

Monopoly = One seller + a unique product + no entry for others. This makes the monopolist the king of the market price.

Answer 1

Definition: A monopoly is a market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute. Main Features:

Single Seller and Large Number of Buyers: There is only one firm that produces and sells the product. This single firm constitutes the entire industry.
No Close Substitutes: The product offered by the monopolist has no close substitutes available in the market. This gives the monopolist significant market power.
Strong Barriers to Entry: There are high barriers that prevent new firms from entering the market. These barriers can be natural (e.g., control over a key resource), technological, or legal (e.g., patents, licenses).
Price Maker: A monopolist has considerable control over the price of its product. It can set the price, but it must still consider the demand for its product; it cannot charge an infinitely high price.
Downward-Sloping Demand Curve: The firm's demand curve is the market demand curve. To sell more, the monopolist must lower the price of its product.