Chapter 15

Chapter 15 - Chapter 15 Monopoly Monopoly While a...

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 15 Monopoly
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Monopoly While a competitive firm is a price taker , a monopoly firm is a price maker . A firm is considered a monopoly if . . . it is the sole seller of its product. its product does not have close substitutes.
Background image of page 2
Why Monopolies Arise Barriers to entry have three sources: Ownership of a key resource. The government gives a single firm the exclusive right to produce some goods. Costs of production make a single producer more efficient than a large number of producers.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Monopoly Resources Although exclusive ownership of a key resource is a potential source of monopoly, in practice monopolies rarely arise for this reason.
Background image of page 4
Government-Created Monopolies Governments may restrict entry by giving a single firm the exclusive right to sell a particular good in certain markets. Patent and copyright laws are two important examples of how government creates a monopoly to serve the public interest.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Natural Monopolies An industry is a natural monopoly when a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms. A natural monopoly arises when there are economies of scale over the relevant range of output.
Background image of page 6
Economies of Scale as a Cause of Monopoly Quantity of Output Average total cost 0 Cost
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 25

Chapter 15 - Chapter 15 Monopoly Monopoly While a...

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online