(BQ) Part 2 book "Macroeconomics for today" has contents: Fiscal policy, the public sector, federal deficits, surpluses, and the national debt, monetary policy, money creation, money and the federal reserve system, economies in transition, international trade and finance,.and other contents. | CHAPTER 9 Monopoly © David Muir/Digital Vision/Getty Images. P laying the popular board game of Monopoly monopoly is derived from two Greek words meaning teaches some of the characteristics of monopoly “single seller.” A monopoly has the market power to set theory presented in this chapter. In the game version, its price and not worry about competitors. Perhaps your players win by gaining as much economic power as possi- college or university has only one bookstore where you ble. They strive to own railroads, utilities, Boardwalk, Park can buy textbooks. If so, students are likely to pay higher Place, and other valuable real estate. Then each player prices for textbooks than they would if many sellers tries to bankrupt opponents by having hotels that charge competed in the campus textbook market. high prices. A player who rolls the dice and lands on This chapter explains why firms do not or cannot another player’s property has no choice—either pay the enter a particular market and compete with a monopolist. price or lose the game. Then we explore some of the interesting actual mono- In the last chapter, we studied perfect competition, polies around the world. We study how a monopolist which may be viewed as the paragon of economic virtue. determines what price to charge and how much to pro- Why? Under perfect competition, there are many sellers, duce. The chapter ends with a discussion of the pros and each lacking any power to influence price. Perfect com- cons of monopoly. Most of the analytical tools required petition and monopoly are polar extremes. The word here have been introduced in previous chapters. 226 In this chapter, you will learn to solve these economic puzzles: • Why doesn’t the monopolist gouge consumers by charging the highest possible price? • How can price discrimination be fair? • Are medallion cabs in New York City monopolists? The Monopoly Market Structure The model at the opposite extreme from perfect .
