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ECON-101 Lecture Notes - Lecture 15: Natural Monopoly, De Beers, Taipei Metro

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School
MacEwan University
Department
Economics
Course
ECON-101
Professor
andrewwong

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Document Summary

Monopoly: a firm that is the sole seller of a product without close substitutes. The simplest way for a monopoly to arise is for the single for to own a key resource. Although exclusive ownership of a key resource is a potential cause of monopoly in practice, monopolies rarely arise for this reason. Debeers, diamonds for engagement right hand left hand 2-month salary. Patent and copyright laws creates a monopoly to serve the public interest. The benefit of the patent and copyright laws is the increased incentive for creative activity. The cost of patent and copyright laws is monopoly pricing. When a single firm can supply the good at a lower cost than its competitors. A natural monopoly arises when there are economies of scale over the relevant range. Sr behavior in competitive market: 1) find mr=p=ar: find q where mr=mc.

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Related Questions

What might create a monopoly?

  a.

a key resource is owned by a single firm.
  b.

the government gives a single firm the exclusive right to produce a good or service.
  c.

a single firm can produce output at a lower cost than a larger number of producers.
  d.

all of the above

A firm that is a "pure monopoly" is:

   

a. A seller of a highly advertised and differentiated product in a market with low barriers to entry in the long-run.
   

b. The only seller of a good for which there are no good substitutes in a market with high barriers to entry.
   

c. The only buyer of unique raw material.
   

d. The producer of a product subsidized by the government.

A natural monopoly exists when

a. a monopolist produces a product, the main component of which is natural wood.

b. economies of scale are so large that only one firm can survive and achieve low average total cost in the long run.

c. a firm is the exclusive owner of a key resource necessary to produce the firm's product.

d. there are many close substitutes for a firm's product