Control of natural resources a prime source of

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Control of natural resources: A prime source of monopoly power is the control of resources that are criticalto the production of a final goodNetwork externalities: The use of a product by a person can affect the value of that product to other people.Legal barriers: Legal rights can provide opportunity to monopolise the market of a good.Deliberate actions: A company wanting to monopolise a market may engage in various types ofdeliberate action to exclude competitors or eliminate competition.III.How monopolies make producing and decisions1.Monopoly versus competitive marketsWhile monopoly and perfect competition mark the extremes of market structures there is somesimilarity. The cost functions are the same. Both monopolies and perfectly competitive (PC)companies minimize cost and maximize profit. The shutdown decisions are the same. Both areassumed to have perfectly competitive factors markets. There are distinctions, some of the moreimportant of which are as follows:
monopolistic marketcompetitive marketMarginal revenue and pricePrice is set above marginal costPrice equals marginal costProduct differentiationNo product differentiation.Everyproduct is a perfect substitute forany other.Absolute product differentiation.There is no available substitute for amonopolized good.Number of competitorsan infinite number of buyersand sellersa single sellerBarriers to EntryFree entry and exitThere are no barriers to entry, orexit competitionHigh barriers to entryThe barriers is strong to preventcompetitor from entering themarketElasticity of Demanda relatively inelastic demandcurveA low coefficient of elasticity isindicativea perfectly elastic demand curveThe coefficient of elasticity isinfiniteExcess Profits:A monopoly can preserve excessprofits because barriers to entryprevent competitorsA PC company can make excessprofits in the short term but excessprofits attract competitorsProfit MaximizationA monopoly maximises profitsby producing where marginalrevenue equals marginal costsA PC company maximizes profitsby producing such that price equalsmarginal costsP-Max quantity, price andprofitIf a monopolist obtains control of a perfectly competitive industry, themonopolist would increase prices, reduce production, and realisepositive economic profitsSupply Curveno such supply relationship exists.a well defined supply function with aone to one relationship between priceand quantity supplied.
-The most significant distinction between a PC company and a monopoly is that the monopoly hasa downward-sloping demand curve rather than the "perceived" perfectly elastic curve of the PCcompany.1A monopoly has adownward-sloping demand curvemeans that the relationshipbetween total revenue and outputfor a monopoly is much differentthanthatofcompetitivecompanies.Total revenue equalsprice times quantity.

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Term
Spring
Professor
Nguyen Thi Hong An
Tags
Business, Monopoly, japan, Empire of Japan, Mitsubishi, Zaibatsu, Meiji government

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