Pure Monopoly

Question

Answer 1

Answer 2

Economies of scale may be so great that only one (or few) firm (s) can afford to achieve the efficient scale.
Legal barriers, so patents, licences
Ownership or control of essential resources
Pricing and other strategies

Answer 3

It slopes downwards, because the monopolist can influence the market.

Answer 4

The marginal revenue is less than the price, because the price set higher means that the extra profit per higher priced units is lost. Monopolists could have overpriced three units, and sold them at a higher price, but instead chose to sell 5 at a lower price, to make more profit. This means selling all units between 3 and 5 at a lower price to: the marginal revenue decreases, along with the price. It stays lower.
The monopolist is the price maker.

Answer 5

Monopolists do not always charge the highest price. Often, it is more beneficial to sell more at a lower price
Monopolists seek maximum total profit, not maximum unit profit.
Monopolists are more likely to make and maintain economic profit on top of normal profit (included in the costs) but they can also make losses, due to lack of demand and high costs.

Answer 6

The output is organized in such a way that the prices are higher, and the market yields neither allocative nor productive efficiency.
Prices are higher, exceeding both MC and ATC
Monopoly increases income inequality
C0sts are different in a monopolistic economy