We learned in previous lesson plans that resources are used efficiently when marginal benefit equals marginal cost.

Economists know that a monopoly--a market in which one firm sells a good or service that has no close substitutes and in which a barrier blocks the entry of new firms--does not use resources efficiently. For example, the tech firm Microsoft's prices are too high in the sense that they exceed marginal cost and result in fewer copies sold of the Windows operating system and Office applications than the efficient quantities.

• Explain what makes a monopoly inefficient.
• Explain whether a monopoly isfairbased on the two views, i.e., fairrulesand a fairresult.