Monopolies come from barriers to entry, that stop firms from entering the market to become competitors. These barriers come from (a) a key resource owned by a single firm, (b) the government giving a single firm the exclusive right to produce or provide a good, (c) the cost of production making a single producer of a product more efficient than a large number of producers.

Because a monopoly has no compatition, it can raise it's prices infinitely. However, the price can be limited by supply. If the supply of a product is large, then, in order to sell all of it, the monoploy has to lower it's price, as shown to the right.

In order to sell all of their product, a monopoly must lower it's price. The more it want's to sell, the lower it's price has to be.

There is a finite point, after which it is no longer financily resonable to continue making more of a product to sell.

The lower the supply of the product, the higher the monopoly can afford to have it's prices, and still sell all of it's product, as demonstrated to the left.