A monopoly is the sole seller of a good or service in a market. Because of this, the firm has complete market power and can maximize its profits. This is in contrast to markets where firms have no market power (such as in perfect competition). In these markets, the price and output levels are determined by the interaction of the buyers and sellers in the market. Specifically, price and output are set at the equilibrium, which is where the supply and demand are equal. Compared to perfect competition, a monopoly sets a higher price and sells a lower quantity.