1. CHARACTERISTICS
   1. FUNDAMENTAL
      1. SINGLE seller
         1. high concentration
      2. UNIQUE
         1. no close substitute
      3. VERY HIGH BARRIER
         1. govt BLOCKED
         2. legal barrier
            1. patents
            2. licenses
         3. ownership to essential raw material
         4. network externalities
            1. eg: Microsoft implement their popular products
            2. win loyalty of customers
         5. natural monopoly
            1. extensive EoS of one firm
            2. socially desirable
            3. if supervised by GOVT
   2. NATURAL MONOPOLY
      1. deep Long-term ATC
         1. large EoS
         2. lower price than competitors
         3. driving others out of B
      2. FC >>> VC
         1. immense investment of capital to enter
            1. electricity
   3. MONOPOLIST a single seller
      1. determine product price
2. COMPARE w/ PC
   1. PC
      1. CONSTANT price
         1. market determined
      2. max REVENUE
         1. choose Q that MR = MC
   2. Momopolist
      1. has power to determine price
      2. MR is steeper than DC
         1. MR = the gradient of TR
      3. max REVENUE
         1. choose MAX Q
3. PRICE MAXIMISATION
   1. BASIC
      1. Monopolists can max profit
         1. producing all units
         2. MR >= MC
            1. hence
            2. profit/unit is NOT maximised
            3. total PROFIT is maximised
      2. MR
         1. No supplier will produce an output corresponding to the inelastic section of the DC
   2. DETERMINES
      1. MR = MC
         1. quantity Qm
      2. reflect on D curve
         1. price Pm
      3. the MONOPOLIST charge price at Pm
         1. higher price
         2. lower quantity
   3. PROFIT
      1. SHORT RUN COST MINIMISATION
         1. P < ATC
            1. cause
            2. weak demand
            3. rising costs
         2. P > ATC
4. ECONOMIC EFFECTS
   1. INEFFICIENCY of SOCIETY
      1. ALLOCATIVE INEFFICIENCY
         1. economic surplus is not MAX
      2. PRODUCTIVE INEFFICIENTY
         1. MONOPOLISTs do not produce at the lowest production cost
         2. do not utilise Rs well
   2. WELFARE LOSS
      1. similar to
         1. price ceiling
         2. price floor
         3. taxes
      2. Consumer Surplus: A
      3. Producer Surplus: B + E + F
      4. Deadweight loss: C + D
5. GOVT REGULATION & INTERVENTION
   1. Legal action
      1. Competition policy
         1. Encourage new entrants
      2. anti-monopoly court cases
   2. Imposition of price ceiling
      1. EFFICIENT PRICE
         1. consequences
            1. BOTH EFFICIENCIES are achieved!
            2. Same as the Competitive outcome
      2. REGULARED PRICE
         1. under P
            1. make a loss
            2. PRODUCTIVE EFFICIENCY
   3. TAX
      1. unit tax
         1. able to be passed onto the consumer if we shots its MC curve left with a tax it can create more DWL
      2. lump (flat) tax
         1. does not interfere with the supply (MC) curve
         2. cause DWL
         3. more effective than unit tax
   4. TWO-PART PRICING
      1. charge a fixed amount to the customers
         1. eg "connection fee"