"AIDS has killed more than 36 million people worldwide. There are drugs available to treat AIDS, but the price of one pill is incredibly high in the U.S. coming in at 25 times higher than its cost. Why is that? In this video, Professor Tabarrok ofshows how patent rights have created a monopoly in the U.S. market for AIDS medication, causing pills to be very expensive. In other countries, however, such as India, which does not recognize patents on AIDS medication, prices remain low. Using this example, hegoes over how monopolies use market power to increase prices."

• What do economists mean by "market power"?
• Identify a real-world example of a monopoly. What barriers to entry allow the firm to avoid competition and maintain its monopoly status?
• Explain whytheprofit-maximizing monopolist in the example doesn't want to charge more than $12.50 per pill, even though they can set the price at any level they want.