Explain the concept of monopoly power.

Explain the concept of monopoly power.

Monopoly power refers to the ability of a single firm or a group of firms to control the market and influence the price and quantity of a particular good or service. It occurs when there is no or limited competition in the market, allowing the monopolistic firm(s) to have significant market power. This power enables them to set higher prices, restrict output, and earn abnormal profits in the long run. Monopoly power can arise due to various factors such as barriers to entry, exclusive control over key resources, patents, or government regulations. It is generally considered detrimental to consumer welfare as it leads to higher prices, reduced choice, and potentially lower quality products or services.