Monoploy

Question 1

Disadvantages

Answer 1

• monoplies may suffer from x-efficacy according to ( Leiberstein 1966) - there is little comp meaning no pressure to keep costs down and rise in costs will occur causing wastage of products meaning monoplies are inefficient.
• dynamic inefficiency can occur - since monoplies are defended by enters barriers - less likely develop new technology.
• meaning prices cont to be high and less variety of products available for consumers to buy.
• addition there will be high prices & low output both in S&LR.

Question 2

Advantages

Answer 2

• lead to economies of scale , can avoid wasting of resources
• abnormal profits can be used for innovation & creates new products

Question 3

What is a natural monopoly

Answer 3

• monologue that feels safe as there no comp and profit is high

Question 4

What is price discrimination

Answer 4

• takes place when firms provide the same products to diff customers for diff prices.
• e.g- night club - might change price depending on time of day
• firms Cani,prove its own producer surplus as well as profits and can reduce consumer slurped
• higher prices increase revenue as there will be inelastic prices

Question 5

Arrugued monoplies bad for consumers

Answer 5

• since no comp and being only firm available- price maker
• sole supplier can refuse to sell customers
• if monopolies act this way - gov may Reg or remove

Question 6

Type of industry

Answer 6

• Google - control 70% of web search market
• company grown - purchased YT - branches into email,maps,gps,online data ,storage and mobile phones.
• competitors - micro - 18% & yahoo - 11% of market.

Question 7

Monopolist demand curve

Answer 7

• monopolist demand curve is market demand curve and downward sloping
• market is profit maximiser means produces at highest output when MR=MC
• it will be productively inefficient because it is not producing at mini of AC curve & alloctively inefficient because not producing at P=MC.

Question 8

Pure monopoly

Answer 8

• company holding pure monopoly does not need 2 stress about comp as sole producer of product.
• monopoly products considered unique and downward slope which is more Inelastic than oligopoly.
• example - water & gas companies

Question 9

How many firms does a monopoly have

Answer 9

• monopoly exists where only 1 do,ain’t firm within an industry
• difficult process establishing monopoly - based on how narrowly an industry is define:
• known as price maker
• barriers preventing new entries - defended monopoly from comp include - legalisation - powerful from can be protected by law such as obtaining a patent and prevents other firms developing their own creation for timed period.
• other barriers are brand loyalty, power over supplies & stragies get rid of comp.