Final answer:
A monopoly has market power, enabling it to set its own prices to a certain extent, but these prices are constrained by consumer demand. They can select their profit-maximizing output and prices, without having to consider the potential reactions of competitors, unlike in perfect competition.
Step-by-step explanation:
Monopolies have market power, meaning they have significant control over the market price of their goods or services due to the lack of competition. A monopoly is able to charge any price for its product, but the price is constrained by the demand for the product. Even with high barriers to entry that protect a monopolist, they cannot charge the highest price possible without considering consumer demand. Instead, a monopoly will choose a profit-maximizing quantity to produce and will set a price that maximizes profits, bearing in mind that consumers may choose to spend their money on alternatives if prices are too high.
Briefly, monopolies are protected from competition through various means like laws, technological advantages, and certain configurations of demand and supply. Without having to worry about the actions of competitors, a monopoly has some power to choose its market price instead of being a price taker like firms in a perfectly competitive market.