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Chapter 15

Chapter 15 - Monopoly

2 Pages
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Department
Economics
Course Code
ECN 104
Professor
Tsogbadral Galaabaatar

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Description
Chapter 15IntroductionA monopoly is a firm that is the sole seller of a product without close substitutes In this chapter we study monopoly and contrast it with perfect competitionThe key difference A monopoly firm has market power the ability to influence the market price of the product it sellsA competitive firm has no market powerWhy Monopolies Arise The main cause of monopolies is barriers to entryother firms cannot enter the market Three sources of barriers to entry 1 A single firm owns a key resourceEg DeBeers owns most of the worldsdiamond mines 2 The govt gives a single firm the exclusive right to produce the goodEg patents copyright laws Monopoly vs CompetitionDemand Curves In a competitive market the market demand curve slopes downwardBut the demand curve for any individual firms product is horizontal at the market priceThe firm can increase Q without lower
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