ECON 1010 Lecture Notes - Lecture 13: Marginal Revenue, Natural Monopoly, Demand Curve

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whitesalmon848

12 Dec 2017

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Monopoly-a market with a single rm that produces a good or service for which no close substitute exists and that is protected by a barrier that prevents other rms. No close substitute: a monopoly exists in a market for a good or service for which there is not any close substitute, therefore, a monopoly doesn"t face competitions from other rms. Barrier to entry: barrier to entry, a constraint that protects a rm from potential competitors. Ownership barrier to entry: an ownership barrier exists if a rm has more of a key resource than other rms (ex. diamonds) Monopoly price-setting strategies: even though a monopoly can choose its own price, it faces constraints like the larger quantity it produces, the lower the price has to be. Single price: single price monopoly, a rm that must sell each unit of its output for the same price to all its customers.

Related Questions

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, the ____.

A) firm is a single-price monopoly

B) good that the industry produces has close substitutes

C) firm is a natural monopoly

D) firms are protected from competition by a legal barrier

carminegoldfish488

1. Which characteristic led to Microsoft exercising monopoly power?

A.copyright protection for the Windows operating system

B .no close substitutes

C.economies of scale

D.government franchise

2. The goal of antitrust law is to:

A. prevent monopolies and monopoly power from arising.

B.protect monopolies from the competition.

C. make sure consumers pay high prices.

D. preserve allocative inefficiencies of monopolies.

3. Which of the following is not a characteristic of a monopoly?

A. The market has just one seller.

B.There exist significant barriers to entry.

C. Substitutes for the monopolist's products are available to buyers.

D. No close substitutes exist for the monopolist's products.

4. A constantly declining long-run average cost curve is a characteristic of what type of industrial structure:

A. Monopoly

B. Natural monopoly

C. Oligopoly

D. Perfect competition

5. An industry that has large economies of scale operates most efficiently as a(n):

	A.competitive industry.
	B.monopoly
	C.regulated natural monopoly.
	D.anarchic industry.

goldcattle908

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.

ECON 1010 Lecture Notes - Lecture 13: Marginal Revenue, Natural Monopoly, Demand Curve

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