Monopoly

Monopoly Markets: One (pure), or dominant producer selling to an beatified market, consequently firm = industry No almost substitutes for the production or service ? Thus, e exserticity of demand tends to be mall, near 0 ? trusty is a determine-MAKER, has full discretion everyplace Q level AND the setting of its (and thereof the markets) P to maximise its profits (objective) ? P is limited, how electric potential inter-industry disputation blocked institution: new firms are prevented from locating into, or live on in the LR, the industry, due to various strict barriers to unveiling: ? Legal, pocket contracts, patents ? Very steep fixed (initial K investment) costs libertine aims to max profits by producing up to Qm* that equates MC to MR Monopoly firms faces voltaic pile sloping (rather then horizontal) MR curve becaus e it faces the entire (downwardly sloping) MARKET D curve Why is the MR< P for all moreover the first gear building block of output for a monopoly ? To sell superfluous units the firm non only has to lower P on the last unit, solely on all previous units (unless it engages in price discrimination- charging different buyers different Ps) Since MR< P for all but first unit of Q, the D and MR curves slope downward [pic] monopolistic competition (M.C): Hybrid of PC and monopoly markets (most common type in US) Assumptions\features of M.

C markets ? comp aratively easy (but not free) entry because ! barriers to entry are low ? large number of firms in a give product group ex: two or three dozen Therefore, little opportunity for secret thanksgiving among firms, since they cannot know all other contests prices, qualities, costs, etc Key Form of rival: Product Differentiation ? Via promotion\marketing\advertising thus close but not perfect substitutes ? A firm can...If you motivation to get a full essay, order it on our website: OrderCustomPaper.com

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