Chapter 15

Chapter 15 discusses the aspects of monopolies. Monopolies have only been discussed briefly in previous chapters but this chapter discusses monopolies with a lot more detail about how they are formed, how they make profit, and the difference between a competitive market and the market of a monopoly. A monopoly is a firm that is the sole seller of a product without close substitutes and usually is the sole owner of a key resource. Being the sole seller in a market allows a firm to supply the market at a lower cost than other firms would be able to do. Chapter 15 compares characteristics of a competitive market to the market of a monopoly, like the maximizing of profits and government regulation.

            I have wondered about the characteristics of monopolies since they were mentioned very briefly in the textbook before chapter 15. Finally reading about monopolies has been very interesting. I assumed that monopolies were always a bad thing because I thought that, since they control the entire market, they would be able to place as high of a price as they would like on their product. But after reading Chapter 15, I have realized that this is not necessarily true. I have learned that since the market of a monopoly still has a demand curve, a firm cannot charge any price that they want because they need to obey the demand curve or else nobody would buy their product.