Category Archives: Monopoly

If Chef Kitteh has no competitors, then no one can get cookies without coming to her. She can set any price, although a higher price will mean that less people will buy cookies because the market demand curve for cookies slopes down. Gustav would give up anything for cookies, but even he is constrained by his budget.

For any supplier who has the recipe, the marginal cost of producing each cookie might be as low as 50 cents. In a competitive market, no producer could charge much more than 50 cents because customers can choose to buy cookies somewhere else at a lower price. If Chef Kitteh has a monopoly on cookies, she will pick a price that maximizes her profit, which may be well above 50 cents.

The result will be less noms for everyone and higher prices. Chef Kitteh makes profits as a monomnomopolist… probably going to be eating tuna every night.

(credit student Luke Markham for “monomnomopoly”) … Read More