Monopoly Flashcards
(25 cards)
There is only one firm producing a good without close substitutes
Lack of substitutes
If new firms enter the industry, the monopolist will not have complete control of a firm on the supply
Barriers to entry
The are no close competitors in the market for the product
Competition
The monopolist decides the price of the product, since it has market power
Price maker
A monopolist can maintain supernormal profits even in the long run
Profits
This is because there is only one firm that sets the market price
Stability of prices
This benefit may be passed on to the consumer in terms of a lower price
Economies of scale
This is why costumers may be getting a better quality product at a reduced price
Research and development
The monopolist could set this, leading to exploitation of consumers as they have no option but to buy it from the seller
Higher prices
Monopolist can sometimes use this, where they can charge different prices on the same product for different consumers
Price discrimination
The lack of competition may cause the monopoly firm to produce this because they know the goods will sell
Inferior goods and services
These monopolies exist because the firm can provide the commodity at a lower cost per unit that potential entrants
Natural monopoly
They are privately-owned companies that are granted a monopoly by the government
Legal monopoly
It is a monopoly that owned and operated by the government
Government monopoly
It have a limited lifespan as a monopoly
Patent monopoly
It is a result of single firm’s virtual control of an entire resource’s supply
Resource monopoly
It is complete if large control over necessary inputs for production causes some companies to be the sole powrled in a industry
Exclusive control over important inputs
In a monopoly, an additional competitor would only make the cost of production higher
Economies of scale
It is typically includes the exclusive benefits from all the market activities involving the invention to which it applies
Patents
In this situation, a business benefits because of the feedback from its buyers or users
Network economics
This licenses are for certain industries or types of businesses
Government licenses
This is the total revenue/quantity
Average revenue
This is the revenue earned by selling one more unit
Marginal revenue
It refers to the tendency of monopoly firms to restrict output to increase prices and earn economic profits
Monopoly underproduction
