Final answer:
Monopolies use their market power to maximize profits by controlling market prices, due to having no significant competition and being insulated by barriers such as technological advantages and legal restrictions.
Step-by-step explanation:
Monopolies use their market power primarily to maximize profits. Unlike in a perfectly competitive market, a monopoly is shielded from competition by various barriers such as laws prohibiting competition, technological advantages, and specific demand and supply configurations. Since monopolies have no significant competition, they are not price takers like firms in perfect competition; instead, they can exert considerable control over their market price.
These monopolies may come into existence for a number of reasons, including natural monopolies which occur due to economies of scale. Additionally, barriers to entry in the market, like legal restrictions, control of resources, or the protection of intellectual property through patents and copyrights, can prevent other competitors from entering the market. Thus, when a single firm has control over the entire market's output, the firm is able to manipulate the price, as it faces the demand curve without parallel competition.
The critical focus of monopolies, therefore, is not on increasing competition, lowering prices, or promoting fairness, but rather on using their exclusive position to maximize profits.