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United States Monopolies 1United States Monopolies:The Effects that Profit-Maximizing Monopolies Have on Our EconomyDaniel MonroeUniversity of Maryland University
United States Monopolies 2AbstractThis study examines the effects that monopolies have on our economy. Monopolies createa low elasticity of demand with the product that the company is selling. This means that theproduct can be sold at maximum advantage price. In the short-run a monopoly firm attainsequilibrium when its profits are maximized, or the losses are minimized. Unlike a competitivemarket firm where market price equals marginal cost and firms earn an economic profit of zero.The large effects that it has on our economy is that it makes consumer items unaffordable likeleaks into human needs. For instance, health care is beyond the realm of many Americans, andthose Americans are left without proper treatment.
United States Monopolies 3United States Monopolies: The Effects that Profit-Maximizing Monopolies Have on OurEconomyA monopolistic firm is one firm produces all the output in a market or has a very highmarket share, this means that there is no competition to combat the prices of that firm. Amonopolistic firm operates by setting up barriers to enter that market, by creating a naturalmonopoly, control of a physical resources, legal monopolies, patents, trademarks, copyrights, orintimidating potential competitors (Monopoly, n.d). Regarding profit maximizing monopolies thecontrol of prices, because of the lack of competition, has a huge effect on consumers. If you lookat figure 1 if the barriers are maintained MC=MR will continue in the long run (Monopoly, n.d).The monopolistic firm has the potential to indefinitely rise prices according to the marketdemand, while at the same time customers are unable to substitute that good or service withsomething more affordable.The article “Monopolies are killing the American Dream. We must keep them in check”,by Sally Hubbard talks about how destructive profit maximizing monopolies are to consumers.

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