monopoly profit

Monopoly profit occurs when a firm restricts output to keep prices higher than their costs. This is a violation of perfect competition, as the firm has market power. In contrast, a monopsony is a market situation with only one buyer, which can lead to lower prices for that buyer.123

In business, profit is the excess of revenue over total cost. Economists, however, define profit more narrowly as returns beyond those for capital, land, and labor. In a perfectly competitive market, pure profit would not exist because competition would drive prices down to the cost of production. However, real-world markets are not perfectly competitive, allowing for profits due to innovation, changes in consumer tastes, or market power.12