Discuss monopoly as a market structure essay

This single seller may be in the form of an individual owner or a single partnership or a joint stock company. In this mode, a trade does not have to lower prices to all consumers in order to vend more products.

Monopoly essay questions

Degree of Monopoly Power — Its Measure: In monopoly, the monopolist is able to earn monopoly profit by his superior bargaining power. One way to maintain a monopoly is by tying or bundling. The purpose of this essay is to discuss that the economic arguments for and against on privatizing a state run natural monopoly. Is Intel a Monopoly. Rarely does a pure monopoly exist. Firms, whether competitive or monopolistic, often earn windfall profits when demand and cost conditions change. Consequently, manufacturers within a perfectly competitive market are tied to the prices determined by the market and do not have leverage of any kind. As, perfect competitive, where there are many firm competing, none of which is large and freedom to entry and all firm products are homogenous products. For they know that it is physically impossible for a copper merchant to convert copper into coal for the purpose of transporting it cheaper. This, in turn, undermines individual enterprise and causes markets to crumble. Monopolies have impacted this economy in the past and even to this day. The ultimate loss will be borne by the public rather than by the monopolist.

Thus the price of the product is given for the consumer. In such a situation, the monopolist would continue to produce so long as he is getting a fair return on his capital investment.

Characteristics of monopoly

As a result, it would provide a good even when there is no profit at a very low price so that the good remains available to the consumer. If he was incurring losses in the short-run, he has enough time to make changes in his existing plant in the long- run so as to maximise his profits. Conditions for Price Discrimination: For price discrimination to exist the following conditions must be satisfied: 1 Market Imperfections: Price discrimination is possible when there is some degree of market imperfection. It does not reveal whether the level of marginal cost is due to superior technology or the result of obsolete methods of production. Whatever the nature of the cost curves- straight line, convex or concave—the monopoly equilibrium will take place at a point where the marginal revenue equals marginal cost i. The foreign market demand curve faced by the monopolist is the horizontal line PDF which is also the MR curve because the foreign market is assumed to be perfectly elastic. Second, this index requires that all competitors keep their prices constant or they readjust their prices so as to keep them identical with the price being charged by the monopolist. There are barriers to entry in Competition Vs. PA is thus per unit loss which the monopolist incurs. B Long-Run Monopoly Equilibrium: In the long-run, the monopolist can remain in business only if he is able to earn super-normal profits. The one in monopoly is the price maker. With entry of new firms ruled out, he can install a plant which gives him maximum profits. For practical purposes the firm is the same as the industry. The US justice department has accused Microsoft of being "engaged in massive anticompetitive practices. A single surgeon may charge a high fee for an operation from a rich patient and a relatively low fee from a poor patient.

Market structure is a classification system for the key traits of a market. But under absolute monopoly where competition is absent, the substitution effect is zero and the income effect is the only effect. The major types of market structures prevalent in the economy are perfect competition, monopolistic market, monopoly, oligopoly and duopoly.

Although they do use physical force, it cannot be considered a legitimate use of physical force within their given territory.

monopoly microeconomics

Key Terms monopoly: A market where one company is the sole supplier. This means that no other firms produce a similar product.

Monopoly market structure

The one in monopoly is the price maker. Supply and demand meaning product, or service available and the desire of buyers for it, considered as factors regulating its price Third, a natural monopoly enjoyed by a firm when it supplies the entire market at a lower unit cost due to increasing economies of scale, just as in the supply of electricity, gas, etc. Hence, they represent the market. The government feels that Microsoft is creating a demand purely for their products by forcing its browser on suppliers and controlling prices In public utility services, the higher price charged to the higher income groups serves as a tool for income redistribution because the government may use these funds to subsidies the lower income groups. The concept of natural monopoly presents a challenging public policy dilemma. However, the only one who benefits from monopoly is the one monopolizing the market as unquestionably the firm will be acting for his own benefit and not for the consumers Sloman, Hinde and Garrat, Monopoly and Oligopoly are economic conditions where monopoly is the dominance of one seller in the market and an oligopoly is a number of large firms that dominate in the Why Monopoly Is Monopoly? This enables the seller to control the price. The first reason Microsoft is not a monopoly is because of the standardized quality of its OS. These companies work together to prey on other businesses and consumers. However, the game Monopoly was designed to demonstrate an economy that rewards wealth creation and the domination of a market by a single entity. Each market structure has its own unique characteristics.

They both revolve around supply and demand. Millions of people around the world know of and play Monopoly.

what is monopoly

At this level, the monopolist would earn only normal profits. To do so, you must be dedicated and make each decision with the aim of improving your chances and wiping out your opponents.

monopoly essay topics

On the other hand, the concept of an oligopoly industry illustrates few sellers that have the potential of making a direct impact in one single industry idea.

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Essay on Monopoly Market