Chapter 25 Terms 102 - D efinition of a Monopolist: A...

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Definition of a Monopolist: A single supplier that comprises its entire industry for a good or service for which there is no close substitute. Barriers to Entry: For any amount of monopoly power to continue to exist in the long-run, the market must be closed to entry in some way. Either legal means or certain aspects of the industry’s technical or cost structure may prevent entry. Economies of Scale: When economies of scale exist firms with larger output have lower average costs that enable them to charge a lower price and drive smaller firms out of business. Natural monopoly arises when there are large economies of scale relative to the industry’s demand, and one firm can produce at a lower average cost than can be achieved by multiple firms. Licenses, Franchises, and Certificates of Convenience: In many industries it is illegal to enter without a government license, or certificate of convenience and public necessity. Because franchises or licenses are restricted, firms already in the industry can earn long-run
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This note was uploaded on 06/06/2011 for the course ECON 102 taught by Professor Dsilvia during the Fall '11 term at Moraine Valley Community College.

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Chapter 25 Terms 102 - D efinition of a Monopolist: A...

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