If a monopolist is the only seller in a particular industry, and if an industry is comprised of a group of sellers of like products, then there are no close substitutes for the monopolists product. As the results, monopoly creates the unique product which dose not has close substitutes. C Groups must have different elasticities of demand for the product. Examples are public utilities and professional sports leagues, Characteristics 1. Marty faces declining marginal revenue i. In pure monopoly a single firm represents the whole industry. The firm is the only seller of a unique product.
D The items cannot be bought by people in the low-price group and transferred to members of the highprice group. The key to understanding monopolies and monopoly power is the marginal revenue calculation. In order to understand if Microsoft is a monopoly one must first know the definition of a monopoly. B a loss that could be reduced by producing less output. Comparing a pure monopoly and a purely competitive firm with identical costs, we would find in long-run equilibrium that the pure monopolist's: A price, output, and average total cost would all be higher. As against this, in a monopolistic competition, there is some control over price.
This market structure will not contribute to a fair income distribution of our society. We will compare features, similarities, differences, advantages and disadvantages. For a pure monopolist marginal revenue is less than price because: A the monopolist's demand curve is perfectly elastic. Some examples of legal barriers are government-issued licenses, copyrights, and patents. D economies of scale are obtained at relatively low levels of output. D indeterminate unless marginal cost data are known.
. Thus, monopoly is a vast aspect because of the fact that there are a lot of factors that determine pure monopoly in a certain industry. However, an economic analysis of the different firms or industries within an economy is simplified by first segregating them into different models based on the amount of competition within the industry. A pure monopolist should never produce in the: A elastic segment of its demand curve because it can increase total revenue and reduce total cost by lowering price. C A monopolistic firm produces a product having no close substitutes. Start-up franchises within this market structure can begin operating with relatively low initial investments compared to other industries. Other examples are book manufactures, cereal mfgs, major domestic beer mfgs.
C long-run average costs rise continuously as output is increased. Natural Monopoly A natural monopoly is a firm with such extreme economies of scale that once it begins creating a certain level of output, it can produce more at a far lower cost than any smaller competitor. This is reflected as an additional , which comes at the expense of lower consumer surplus for the buyers of the product. D may be positive or negative depending on market demand and cost. Patents are another form of government-sanctioned monopolies.
D allocative efficiency but not productive efficiency. The monopolist can use this advantage to maximize its profits. D price and output would be lower, but average total cost would be higher. A The seller must have some monopoly power; that is, it must be able to set the product price. An oligopoly or monopoly can increase profits P e to P m by reducing supplies Q e to Q m , which increases prices. The monopolist can charge the price that consumers will pay for that output level. After the patent expires, the invention enters the public domain and the product or process can be duplicated by competitors.
If you do not include the words, the email will be deleted automatically. The marginal revenue curve is below the demand curve. In some cases, the monopoly may exist indefinitely with the government's permission and in other cases, a monopoly is granted for a specific period of time. Which of the following is not an example of price discrimination? Competition, Economics, Monopolistic competition 1379 Words 5 Pages overlooked, but is vital to this industry is the ease of entry into the market. C when a monopolist lowers price to sell more output, the lower price applies to all units sold.
B The monopolist's marginal revenue is less than price for any given output greater than 1. Total revenue PxQ rises until it reaches some maximum, then begins to fall. B adds an amount to total revenue which is equal to the price of incremental sales. It can range from close to zero to 10,000. D Purely monopolistic sellers earn only normal profits in the long run A single-price monopoly is economically undesirable because, at the profit maximizing output: A marginal revenue exceeds product price at all profitable levels of production. For example, Microsoft sells PowerPoint, Access, Excel and Word as one product rather than separate ones. B monopolists always price their products on the basis of the ability of consumers to pay rather than on costs of production.