Read this chapter to learn the characteristics, workings, and effects of the monopoly model. Take a moment to read through the stated learning outcomes for this chapter of the text, which you can find at the beginning of each section. These outcomes should be your goals as you read through the chapter. Attempt the "Try It" problems at the end of each section before checking your answers.

2. The Nature of Monopoly

2.2. Answers to Try It! Problems

  1. The government's grant of an exclusive franchise to the drug gave the firm monopoly power.
  2. While John and Mary have the only shop in town, this is an easy entry business. Further, there may be competitors in the nearby town. John and Mary probably have monopoly power, but they do not have a monopoly.
  3. Natural monopoly.
  4. Patent with strong network effects.