Sess 9 Monopoly - CHAPTER 13 Monopoly Business...

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Business Microeconomics Instructor: Gulnara Moldasheva 1 Monopoly CHAPTER 13
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Business Microeconomics Instructor: Gulnara Moldasheva 2 After studying this chapter you will be able to ° Explain how monopoly arises and distinguish between single-price monopoly and price-discriminating monopoly ° Explain how a single-price monopoly determines its output and price ° Compare the performance and efficiency of single-price monopoly and competition ° Explain how price discrimination increases profit ° Explain how monopoly regulation influences output, price, economic profit, and efficiency
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Business Microeconomics Instructor: Gulnara Moldasheva 3 135 128 96 1,314 967 2,416 Крупные 454 315 199 5,536 8,243 14,233 Средние 16,447 9,523 694 274,334 18,386 309,167 Малые 17,036 9,966 989 281,184 27,596 325,816 РЕСПУБЛИКА КАЗАХСТАН совместных предприяти й ( с иностранны м участием ) с участием государст ва ( без иностран ного участия ) иностранная из них частная всего государст венная в том числе по формам собственности Всего по состоянию на 1 мая 2013 года Зарегистрированные юридические лица по регионам Республики Казахстан и формам собственности
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Business Microeconomics Instructor: Gulnara Moldasheva 4 Dominating the Internet eBay and Google are dominant players in the markets they serve. These firms are not like the firms in perfect competition. How do firms that dominate their markets behave? Students get lots of price breaks—at the movies, hairdresser, and on the airlines. Why? How can it be profit maximizing to offer lower prices to some customers?
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Business Microeconomics Instructor: Gulnara Moldasheva 5 Market Power Market power and competition are the two forces that operate in most markets. Market power is the ability to influence the market, and in particular the market price, by influencing the total quantity offered for sale. A monopoly is an industry that produces a good or service for which no close substitute exists and in which there is one supplier that is protected from competition by a barrier preventing the entry of new firms.
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Business Microeconomics Instructor: Gulnara Moldasheva 6 Market Power How Monopoly Arises A monopoly has two key features: ° No close substitutes ° Barriers to entry Barriers to Entry Legal or natural constraints that protect a firm from potential competitors are called barriers to entry . There are two types of barriers to entry: legal and natural.
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Business Microeconomics Instructor: Gulnara Moldasheva 7 Market Power Legal Barriers to Entry Legal barriers to entry create a legal monopoly , a market in which competition and entry are restricted by the granting of a ° Public franchise (like the Postal Service, a public franchise to deliver first-class mail) ° Government license (like a license to practice law or medicine) ° Patent and copyright
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