15 Book Notes, Econ 201

15 Book Notes, Econ 201 - 15 Book Notes Econ 201 Microsoft...

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15 Book Notes, Econ 201 Microsoft has a monopoly of the market for Windows. Monopoly is a price maker A monopoly charges a price that exceeds marginal cost Monopolies can charge high prices for their products Monopolies want to maximize profits, often not in the best interest of society Governments can sometimes improve market outcomes Government wouldn’t allow Microsoft to buy Intuit or integrate the Internet browser into its operating system Monopoly: A firm that is the sole seller of a product without close substitutes 3 sources of barriers to entry: - Monopoly resources: a key resource required for production is owned by a single firm o Water in a small town o Not the ONLY reason a monopoly arises - Government Regulation: the government gives a single firm the exclusive right to produce some good or service o Kings once gave these rights to friends and allies o Government does it because it is viewed in the “public interest” o Examples: Patent & Copyright Laws - The production process: A single firm can produce output at a lower cost than can a larger number of producers Natural Monopolies: a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
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This note was uploaded on 10/13/2011 for the course EC 201 taught by Professor Haider during the Spring '10 term at Michigan State University.

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15 Book Notes, Econ 201 - 15 Book Notes Econ 201 Microsoft...

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