Where Monopoly Comes From

The single seller

Barriers, the moat

Measuring monopoly power

The question the module asks

Which of the following firms is closest to a true monopolist?

A water utility's costs are dominated by laying pipes, and serving the whole city costs 40 percent less per household than serving half of it. What kind of monopoly is this and why?

A monopolist faces demand P = 60 - Q/2, so that selling 40 units requires a price of 40 dollars. Compute the price needed to sell 60 units, and write the number.

Which of the following is LEAST like a barrier to entry?

A messaging app becomes more valuable to each user as more friends join, and it already holds most of the market. What does this feature do?

Serving a whole city with one water network costs 150 million dollars, while two overlapping half-networks would cost 100 million each. Compute the saving from the single network in millions, and write the number.