Monopoly Power Flashcards
1
Q
Monopoly power occurs when…
A
A firm is a price maker
2
Q
Example of monopoly power
A
Microsoft had lots of monopoly power when they started out in 1985 as they were pretty much the only software supplier in the market and consumers had nowhere else to get their software from
3
Q
Why is monopoly power another cause of market failure
A
Because firms exploit consumers
4
Q
What can a monopoly do to not cause market failure?
A
If the monopoly invests its profits to R&D it does not cause market failure
