Unit 2.11 · Market Failure: Market Power
Monopoly
AO2AO3AO4HLDiagram required
Syllabus Requirement
Single or dominant firm, high entry barriers, no close substitutes. Includes abnormal profits, allocative inefficiency, and welfare loss. Also covers natural monopoly.
Assessment Objectives
AO2Application and Analysis
AO3Synthesis and Evaluation
AO4Use of Appropriate Skills
Summary
A monopoly is a market structure characterized by a single supplier that has the ability to control market supply and prices. This market power allows monopolists to set prices higher than in competitive markets, leading to potential welfare losses and reduced consumer choice.