A monopoly, a market in which one firm holds all the supply of a product, has the least competition in all of the market structures. There are high barriers to entry and monopolists can set prices to whatever they wish because there are no similar substitutes. Characteristics of this market include...

1. Government power

2. Single seller/firm

3. Economies of scale means that firms specialized in the industry will be able to produce for lower costs. Therefore, it is more difficult for other firms to enter the industry

4. Copyright or patents to prevent others from entering the market

As shown in the second graph, a monopoly will only produce in the elastic range because that is where the marginal revenue is positive. 

Similar to perfect elasticity, monopolies also produce at the quantity of Mr=Mc(point A) also known as the productive efficiency point. The point of production will be wherever that point meets the demand curve which is at point B. 

To its left, within the rectangle, is the total revenue. The total cost is separated from the profit by the point where the Atc meets at point B. Above it lies the profits, also known as the producer surplus, while below it is the total costs. 

The consumer surplus is the triangle at the top as it signifies what consumers were willing to pay.

The deadweight loss is the triangle at points A, B and D. The productive efficiency point results in disequilibrium as there is a shortage. Point D would be the revenue-maximising quantity but monopolists still produce at where Mr=Mc. To prevent this deadweight loss, governments often put a price ceiling at the price of point D.  

Price discrimination is the idealistic way that monopolies would sell their products. Price discrimination is selling things at the highest point consumers are willing to pay for them. As shown in this graph, there is no consumer surplus because it is replaced by profit made by the producers.

To prevent deadweight loss, the government often forces monopolies to produce at the socially optimal pricing(P=Mc). However, this usually makes the firm go out of business because of how the firm makes a loss at this point.

A fair-return pricing is another way to restrict monopolies that are less binding. At this price, the price is equal to the Atc allowing the firm to break even.