Monopoly

MONOPOLY (chapter 10) I.A matched fuddled is a monetary value taker; a monopoly firm is a price maker. II.Why Monopolies Arise A.Definition of monopoly: a firm that is the sole seller of a product without pissed substitutes. B.The fundamental cause of monopoly is barriers to entry. 1.Monopoly Resources A monopoly could have sole self-possession or control of a key resource that is utilize in the production of the beneficial. 2.Government-Created Monopolies Monopolies can arise because the government grants iodin person or one firm the exclusive justifiedly to sell some good or service. `Patents are issued by the government to give firms the exclusive right to produce a product for 20 years. Patents involve trade-offs; they restrict competition yet encourage research and development. 3. Natural Monopolies natural monopoly: a monopoly that arises because a single firm can supply a good or service to an entire grocery store at a smaller make up than could two or more firms. A natural monopoly occurs when there are economies of scale, implying that average total cost falls as the firms scale becomes larger. III.How Monopolies Make drudgery and Pricing Decisions A.Monopoly versus Competition The key difference between a competitive firm and a monopoly is the monopolys ability to influence the price of its output. The bespeak curves that each of these types of firms faces is different as well.

A competitive firm faces a perfectly elastic demand at the market price. The firm can sell all that it wants to at this price. A monopoly faces the market demand curve because it is the only seller in the market. If a monopoly wants to sell more output, it must lower the price of its product. [pic] B.A Monopolys Revenue Example: sole producer of water in a town. |Quantity |Price |Total |Average | b effectuateline Revenue | | |... If you want to get a full essay, order it on our website: Ordercustompaper.com

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