ECON1020 Lecture Notes - Lecture 9: Social Cost, Price Discrimination, Imperfect Competition

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ceruleanwildebeest331

15 Sep 2018

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It has these characteristics: there is only one firm in the market, it is large, product differentiation n/a it is the only supplier of the product. Therefore, it is a price maker (it has full market power, which is a source of market failure: complete barriers to entry (no market entry) Structure: sources of monopoly power: resource-based monopolies, when a single firm owns a key resource for a product, for e. g. the market for water. If a single firm owns the dams that supply water to a town, then that firm has a monopoly on water: monopoly resources are rare. To provide water to a town, a firm has to pay the fixed cost of building a new network of pipes throughout the town. Because there is a large fixed cost of building the road and a negligible marginal cost of additional trips, the. Atc of a trip falls as the number of trips rises.

Related Questions

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

crimsonalligator541

The terms price maker, price setter, and price searcher are all meant to imply the same thing, which is

Select one:

a. firms operating in a perfectly competitive market have pricing power.

b. it is impossible for any firm to have pricing power.

c. a firm operating in any market but perfect competition that also determines the quantity it produces and the price at which it sells the products.

d. any firm can determine the price at which it sells a product, but no firm can determine the quantity it produces.

e. a price increase will likely drive every customer for the producer of this product to another product.

In monopoly,

Select one:

a. the number of firms is large.

b. there is ease of entry into the market and exit from the market.

c. the product has many good substitutes.

d. economic profits are zero in the long run.

e. None of these choices.

Your feedback will be greatly appreciated. Thanks in advance.

Q: Point out one product that you believe is produced by a âpureâ monopoly firm (or a firm with a high degree of monopoly power).

Is it a local, regional or national monopoly?

What are some of the Barriers to Entry into this industry?

For the product listed, list substitute(s) for this âmonopoly.â

Demonstrate how the relative âclosenessâ of the substitutes listed determines, to a large degree, effective limits to the monopoly power of these firms.

A: I believe Amtrak is a monopoly. This is a national monopoly because its available coast to coast, you may travel locally with Amtrak, state to state as well. The barrier for entry are the limited railroad systems for Amtrak, limited resource, cost to produce additional train system, and fact that Amtrak is not producing a profit even though they are a monopoly. Train transportation is not popular anymore, and is difficult for them to cut costs because they donât have a lot of train tickets purchased. So, they increase their prices for what they do sell. Other forms of transportation are not changing the fact that it is a monopoly, but has affected it from taking control of transportation. Purchasing a rental car, bus ticket or a plane ticket has been more convenient and inexpensive. I personally have wanted to purchase a train ticket multiple times, but the routes are wrong, or the length of trip duration has exceeded my availability, and costs are not worth the time. There are smaller train lines but are not monopolized like Amtrak. Example you travel and look up Amtrak station, name of the company. When you fly the airlines is not called the airport which has multiple airlines. Train station is usually Amtrak.

ECON1020 Lecture Notes - Lecture 9: Social Cost, Price Discrimination, Imperfect Competition

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