What is a monopoly?
Monopolies exist when there is basically only one supplier of a good or service. In this scenario, the firm has the highest level of market power, as consumers do not have any alternatives (i.e. no competition). As a result, monopolies often reduce output to increase prices and earn more profit.
From the perspective of society, most monopolies are usually not desirable, because they result in lower outputs and higher prices compared to competitive markets. Therefore, they are often regulated by the government.
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