HON 1302 Chapter Notes - Chapter 9: Price Discrimination, Efficient-Market Hypothesis, Economic Equilibrium
23 Apr 2017
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The monopoly market structure: complete opposite of perfect competition, corresponds only approximately to real-world industries. Single seller: this single firm is the industry, one firm provides total supply in a market. Legal barriers: government granted licenses restrict entry into some industries and occupations, patents prohibit other firms from selling a product for 20 years, economies of scale, large-scale production reduces costs of production, means monopolies can emerge naturally. Natural monopoly = an industry in which the long-run average cost of production declines throughout the entire market. As a result, a single firm can supply the entire market demand at a lower cost than two or more smaller firms: common in utility sectors: natural gas, water, cable, etc. In the case of monopolies, the government regulates the monopolies to prevent exploitations and protect consumers. 120: as you can see in the above graph the cost of production for 5 firms would be a total of.
