1 Monopoly Why Monopolies Arise? Monopoly is a rm that is the sole seller of a product without close substitutes. The fundamental cause of monopoly is barriers to entry: A monopoly remains the only seller in its market because other rms cannot enter the market and compete with it. Barriers to entry have three main sources: 1. Monopoly Resources. A key resource is owned by a single rm. Example: The DeBeers Diamond Monopoly|this rm controls about 80 percent of the diamonds in the world. 2. Government-Created
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Competitive Market The following seven features characterize perfectly competitive free markets: 1. There are numerous buyers and sellers‚ none of whom has a substantial share of the market. 2. All buyers and sellers can freely and immediately enter or leave the market. 3. Every buyer and seller has full and perfect knowledge of what every other buyer and seller is doing‚ including knowledge of the prices‚ quantities‚ and quality of goods being bought or sold. 4. The goods being sold in
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Econ2TEST4 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club? a. Wilson paid $120 for an outside laundry service to clean the towels used at the club. b. Wilson paid $100 for the pest control exterminator to spray the health club. c. Wilson previously worked as an accountant‚ earning $3‚000 a month. d. Wilson usually eats four
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Unit 2.3.3 Pure Monopoly Unit 2.3.3 Monopoly Unit Overview 2.3.3 - Monopoly • Assumptions of the model • Sources of monopoly power/barriers to entry • Natural monopoly • Demand curve facing the monopolist • Profit-maximizing level of output • Advantages and disadvantages of monopoly in comparison with perfect competition • Efficiency in monopoly • Price discrimination >>Definition >>Reasons for price discrimination >>Necessary conditions for the practice of price discrimination >>Possible
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involved in agriculture. Public finance (see public choice) looks at how the government enters the scene. Traditionally‚ its focus was on taxes‚ which automatically introduce “wedges” (differences between the price the buyer pays and the price the seller receives) and cause inefficiency. More recently‚
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Chapter 10 (Tentative Due Date: by November 1) Question 2: Discuss the major barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly. Which barriers‚ if any‚ do you feel give rise to monopoly that is socially justifiable? LO1 The major barriers to entry in an industry are economies of scale‚ legal barriers such as patents & licenses and other strategic or pricing barriers. Economies of scale occur only in large firms who are able to reach a minimum
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To answer this question‚ four perspectives were analyzed: the domestic government‚ the buyer government and industries‚ the seller company’s future growth‚ and competitiveness of the seller. Under each perspective‚ benefits and drawbacks were compared. In the end‚ the result showed that throughout all four spectrums‚ countertrading did serve a valuable purpose for the seller firm. It meant exporters were able to gain consumers internationally‚ while also allowing them to differentiate their value
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allocate resources among alternative uses. The reason people have to make choices is scarcity‚ the fact that we don’t have enough resources to satisfy all our wants. Microeconomics studies the maximizing behaviour of individual people and individual firms. Economists assume that people work toward maximizing their utility‚ or happiness‚ while firms act to maximize profits. Macroeconomics studies national economies‚ concentrating on economic growth and how to prevent and ameliorate recessions Macroeconomics
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systems. These two giants have exploited the popularity of their other branded products in persuading grocery accounts to purchase DASANI and AQUAFINA. They have to pay slotting fees beside offering lower price to the supermarket and discount stores sellers as these accounted for 43.5 percent of US industry sales. They also pay rebates of 25 cents per case to secure convenient space in the store. SUPPLIERS TO THE INDUSTRY Suppliers are: Municipal Water Systems‚ Spring Operators PET (Polyethylene
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need to make plan or strategy for their firms. Chapter 2 3. Explain the profit-maximizing production decision of a perfectly competitive firm. Be sure to describe the assumptions/market structure of perfect competition and the condition that guarantees maximum profit. Assumption: Infinity buyers and sellers. Free entry and exit. All the firms produce a standardize product. All the buyers and sellers can have all the information about the market. The perfectly competitive firms area
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