Editing Monopoly (section)

== Characteristics ==
{{more citations needed|section|date=October 2021}}
A monopoly has at least one of these five characteristics:
* ''Profit maximizer'': monopolists will choose the price or output to maximise profits at where MC=MR.This output will be somewhere over the price range, where demand is price elastic. If the total revenue is higher than total costs, the monopolists will make [[abnormal profits]].
* ''Price maker'': Decides the price of the good or product to be sold, but does so by determining the quantity in order to demand the price desired by the firm.
* ''High barriers to entry'': Other sellers are unable to enter the market of the monopoly.
* ''Single seller'': In a monopoly, there is one seller of the good, who produces all the output.<ref>Binger and Hoffman (1998), p. 391.</ref> Therefore, the whole market is being served by a single company, and for practical purposes, the company is the same as the industry.
* ''[[Price discrimination]]'': A monopolist can change the price or quantity of the product. They sell higher quantities at a lower price in a very [[Price elasticity of demand|elastic]] market, and sell lower quantities at a higher price in a less elastic market.

[[Market power]] can be estimated with [[Lerner index]]. High [[profit margin]]s might be caused by different factors, such as [[risk premium]]s or [[monopoly profit]]s.<ref name="j871">{{cite journal | last1=Fisher | first1=Franklin M. | last2=McGowan | first2=John J. | title=On the Misuse of Accounting Rates of Return to Infer Monopoly Profits | journal=The American Economic Review | publisher=American Economic Association | volume=73 | issue=1 | year=1983 | issn=0002-8282 | jstor=1803928 | pages=82–97 | url=http://www.jstor.org/stable/1803928 | access-date=17 August 2024}}</ref>