IB Economics HL 2.11.4 (HL)—Monopoly Question Bank

• Monopoly profit maximization can create allocative inefficiency and welfare loss

• Monopoly may restrict output and raise price compared with perfect competition

• Natural monopoly is a special monopoly case linked to economies of scale

• Diagram: market power where AR exceeds MC

• Diagram: monopolist showing abnormal profit, normal profit, and losses

• Diagram: monopoly versus perfect competition with welfare loss

• Diagram: natural monopoly