Understanding Monopolies in a Market Economy

Course Level 3: Advanced

Estimated Study Time: 1-2 hours

A monopoly exists when one particular business is the only supplier of a commodity or service within any particular sector of the economy. This is a very important concept to understand as to monopolize a market means that a business has significant market power and can charge higher prices. In this economics course you will learn about the characteristics of a monopoly, when monopolies might occur, and the economic and financial implications of a business having a monopoly in a particular commodity or service sector. You will learn how monopolies optimize prices.

Concepts such as total revenue, marginal revenue, and dead weight loss are clearly explained. Monopolies are also contrasted with oligopolies where a market or industry is dominated by a small number of businesses and where the decisions of one business influence the decisions made by the other businesses.

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