There can be general questions about these markets. A perfectly competitive market uses resources in a perfectly efficient way. At the other end of the spectrum, a monopoly uses resources the least efficiently of all. Its high pricing causes a huge social loss ("deadweight loss") by eliminating consumer surplus. The monopoly reduces output in order to cause a scarcity that increases the price to an artificially high level. This is bad for everyone, except the owner of the monopoly, who enriches himself. This is how Bill Gates became the wealthiest person in the world. | There can be general questions about these markets. A perfectly competitive market uses resources in a perfectly efficient way. At the other end of the spectrum, a monopoly uses resources the least efficiently of all. Its high pricing causes a huge social loss ("deadweight loss") by eliminating consumer surplus. The monopoly reduces output in order to cause a scarcity that increases the price to an artificially high level. This is bad for everyone, except the owner of the monopoly, who enriches himself. This is how Bill Gates became the wealthiest person in the world. |