Monopoly market is a type of market which comprises a single seller selling a unique product in the market. In a monopoly market, seller does not face any competition, as he is the only seller of the goods with no close substitutes. For example, a pizza shop may have monopoly, although burger may be a substitutes. Monopoly market lacks the competition. Barriers to enter into monopoly market is very high. It is possible to have a monopoly in short run but it is difficult in long run due to high barriers which exists because the first and foremost reason is that single firm owns the key raw materials necessary to produce a good. We can take DeBeers as an example as it has control over most of the world’s diamond mines. Secondly, the government gives a single firm exclusive rights to produce the good. Examples patents, copyrights laws and public franchise. Third reason is the larger economies of scale that creates natural monopoly, where a single firm can supply the whole market at a lower average cost than two or more firms. Natural monopoly arises as a result of economies of scale because for natural monopoly the average total cost declines significantly as output increases giving monopolist cost advantage over potential competitors Above figure reflects that, the average total cost curve is still falling when it crosses the demand curve at point A. If only one firm produces electricity in the market where average cost intersects the demand curve, average total cost will equal $0.02 per kilowatt-hour of electricity produced. If the market is divided between two firms, each producing 10 billion kilowatt-hours, the average cost of producing electricity increases to $0.04 per kilowatt-hour as shown in point B. In this case, if one firm expands production it can decrease the average total cost curve.