A monopoly of a firm exists, when it is the only firm supplying the output of the industry and there be barriers to entryway prohibiting the new firms from entering that industry. These barriers could be anything ranging from legal barriers to brand verity or even anti competitive behavior from the be monopoly.
It is often argued that interests of the general public ar compromised by a monopoly since it is productively and allocatively inefficient and can file a higher price for a lower train of output being the sole producers of it.
From the graphical record infra it can be seen that there is a unused weight loss of consumer surplus. Being the only industry they argon the price makers and prices are always tack above the b order of battleline cost unlike the competitive firms. For example most pharmaceutical companies set the price of their patented drug much above the marginal costs creating a dead weight loss of consumer surplus. A higher price is charged for lower output. Prices are agonistic by the demand curve, a higher price results in fall in demand that may subsequently go past to fall in revenue.
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There are many grounds at the same time on which the argument of monopoly being productively inefficient can be defended. It is known that monopoly exploits the economies of scale and scope since producers in monopoly are often supplying goods and service on a very with child(p) scale which brings down the total average costs production. decrement in costs leads to an increase in monopoly profits and virtually of the productive gains are transferred to consumers in the form of lower prices ensuring stinting welfare for both consumers and producers.
A graph below explains how the economies of scale achieved from...
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