...DO PURE MONOPOLIES EXIST Page 2 Do Pure Monopolies Exist? Thesis Statement: According to the Essentials of Economics textbook a monopoly is defined as "a market structure in which the number of sellers is a small that each seller is a small that each seller is able to influence the total supply, and the price of a good or service. My essay is going to talk about if I agree if pure monopoly exist. Do I agree that pure monopoly exist actually, I do not agree totally with this statement. I believe that pure monopoly can exist up until another company or companies replace and create a competitive market that can cause the fixed prices to fluctuate. A natural monopoly is a firm with such extreme economics of scale that once it begins creating a certain level of output, it can produce move at a lover cost then smaller competitor. "Natural monopolies occur when, for whatever reason, the average cost curves decline over a relevant span of output quantities. (Spark notes Editors, n.d.) A monopoly is different from competitive firms in that it is not a price taker. Because it's only supplier in the market, it faces a downward sloping demand curve, the market demand curve. As a result, the monopoly is free to choose its price and quality according...
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...Microeconomics Unit 4 IP Pure, Per Se, and Natural Monopolies September 16, 2012 Krugman stated, “Externalities are actions that create side effects that are not properly taken into account. Externalities are one of the principal sources of market failure” (p.434). Two policies that can be used to reduce the total amount of emissions is emission taxes and tradable permits. Krugman stated, “Emissions tax is a tax that is charged depending on the amount of pollution a factory produces” (p.442). Factories are taxed on every unit of pollution produced. The benefit of charging an emission tax is you are giving the factory reason to reduce pollution. They are paying for or being taxed for every unit of pollution they produce. The factory can impose the tax on the consumer, which in turn will decrease supply. When prices are increased, the market quantity or quantity being produced is decreased. Emission tax will decrease the marginal social cost because less pollution will be released. That leaves less cost to the society to clean it up. The marginal social benefit on the other hand will increase because the marginal social cost is decreased. The marginal social benefit is increased because of the money that the society is saved from decrease in the marginal social cost. Therefore, creating the optimal level of pollution. Emissions tax helps to solve the problem of economic inefficiency by allowing...
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...CHAPTER 24 Pure Monopoly A. Short-Answer, Essays, and Problems 1. What are the major characteristics of pure monopoly? 2. What are the major barriers to entry that explain the existence of monopoly? 3. What is the relationship between economies of scale and a natural monopoly? 4. Some economists argue that pure monopolists will purposely avoid the price-output combination that will maximize their profits. Explain how this less-than-maximum profit behavior could be rational. 5. In what ways, if any, do the demand schedules for a purely competitive firm and a pure monopolist differ? What significance does this have for the price-output behavior of each? 6. Why is marginal revenue less than price for every level of output except the first? 7. How does price elasticity affect the price-quantity combination and segment of the demand curve that the monopolist would prefer for price and output? 8. A pure monopolist determines that at the current level of output the marginal cost of production is $2.00, average variable costs are $2.75, and average total costs are $2.95. The marginal revenue is $2.75. What would you recommend that the monopolist do to maximize profits? 9. A pure monopolist sells output for $4.00 per unit at the current level of production. At this level of output, the marginal cost is $3.00, average variable costs are $3.75, and average total costs are...
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...The Microsoft Case Microsoft was investigated for antitrust behavior after a U.S. court of appeals upheld a lower court’s finding that Microsoft used a series of illegal actions to maintain its monopoly in Intel-compatible PC operating systems (95 percent market share). (McConnell, 2012). US District Judge Thomas Penfield Jackson against Microsoft Corporation is a major blow to the largest US software company. Jackson upheld virtually all the contentions of the antitrust division of the Department of Justice, which brought suit against Microsoft for anti-competitive and predatory practices. Judge Jackson's finding of fact is unequivocal about Microsoft's crude and deliberate efforts to use its monopoly position in PC operating systems to gain control over other areas of the lucrative software industry, especially those related to the Internet and e-commerce. As the Wall Street Journal noted in its news report, "the judge came away convinced that the software company has behaved more like a thug in its dealings with competitors and customers." (McLaughlin, 2011). I do agree that Microsoft was trying to gain monopoly power in the computer software industry. Evidence that supports this are supported by the following facts: 1) During that time, Microsoft developed an entire range of products under the Microsoft Office that would cater to the various requirements of professionals in every field - Microsoft Excel, Microsoft Word, Internet Explorer, Windows Media Player, Windows...
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...world companies operate within different market structures, which include pure competition, monopoly, monopolistic competition, and oligopoly. These market structures are characteristic descriptors that reflect the strength of buyers and sellers within the market. This writing will examine each of these market structures and identify a company which operates within the market structure. This writing also examines Quasar Computers, a fictitious company in which the authors participated in a software simulation. Throughout the simulation the Quasar evolved through the four market structures. This writing will identify the findings of that evolution through the life cycle of their products and the changes of buyers and sellers over time. Pure Competition In pure competition, a large number of independent sellers of standardized products characterize the market. Information is free flowing and free entry and exit exist. The seller is the price taker and not the price maker (McConnell & Brue). The firm in perfect competition is a structure that demonstrates the market under degrees of completion, given certain conditions. Pure competition is an unlikely scenario and is rare in the real-world; moreover, this market model is significantly important. One can learn from this model, from various markets, such as form agricultural, fish products, from foreign trade, and metals. The text illustrates pure competition as, “a meaningful starting point for any discussion of price...
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...show the different examples of the different market structures of perfect competition, pure monopoly, monopolistic competition and oligopoly. Perfect competition is a big number of firms all making a familiar product that not one producer can affect the change in price. “If changes in nominal aggregate demand do not affect real output and employment, a financial crisis cannot be very important. However, the neutrality result does not really apply in the real world, either in the short or long runs.”(Ng, Y. 2009) An example of pure competition would be farms that produce common vegetables that we buy at the grocery store. There are so many farmers that produce fruits and vegetables that if one of them were to try to affect the market by lowering or raising prices, it would not really affect the prices of the rest of the market. But if a large portion of farmers where to work together about raising or lowering prices, we would see it affect the market more. “In reality, perfect competition is more theory than actual fact. While there are rare situations in which a marketplace functions with pure competition for a short period of time, the situation normally shifts as various factors change the stalemate created by a multiplicity of sellers and buyers. This is often due to the somewhat stringent set of factors that must be present in order for the competition to be considered perfect or pure. “(wisegeek.com) The problem with this type of market is that there is only a slight motive...
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...marketstructure, upsurge the team’s interest. Thus, this week’s team deliverable focuses on pure monopoly, monopolistic competitive markets, oligopoly, and pure competition. In economics, market structure refers to the number of firms producing identical products or services. In a pure monopoly there is only one! The team pinpointed some key terms that helped us differentiate this type of market from the other three structures. A“single seller” monopoly is one where a single firm is the sole producer of a good or service. A “no close substitutes” is a company that sales a product and there is nothing in the market the can be used as a substitute, therefore everyone have only one place to go to buy the produce. The “price maker” is when a firm has control over the quantity supplied; consequently they will have control over the price of the product they are producing. The “blocked entry” limits competitors from entering a market due to certain barriers such as economic or legal, things such as patents or licenses (McConnell, Brue & Flynn, 2009).A monopoly exists when there is only one supplier of a good, with no close substitutes; the smaller the number of firm in this industry, and the larger those firms are, the more power that exists in that industry around control and prices. As a result, the greater the market share the more power the firm will have over the industry.Today, a few examples of monopolies are Microsoft, Wal-Mart, and the United States Postal Service (Simpson,...
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...Student Full Name : Fikreselassie Betelie Geressu Student Number : R1405D135465 Course Code : MBA-608 Course Name : Business Economics Assignment : Assignment I Submission Date : 01-November-2014 Question 1: Since the recent Great Recession of 2007-2009, there has been increasing disillusionment with the free market system. Critically analyze the view that the free market system is the best and only realistic alternative for determining the allocation of resources in an economy. Solution 1: A general slowdown in economic activity, a downturn in the business cycle, a reduction in the amount of goods and services produced and sold—these are all characteristics of a recession. The recent Great Recession which officially lasted from December 2007 to June 2009 has many factors of which the main root problem is the bursting of a huge trillion dollars housing bubbles and loss of confidence by investors and the public in the strength of key financial institutions and markets. One example of this is the housing crisis morphed into a financial crisis since banks held mortgage backed securities and other assets. Irrespective of such seasonal situations, the market should be free for competition and regulate itself only based on the fair and free competition, which sets the best price for the goods and services a buyer pays for depending only on the market supply and demand. Free market system is the best and realistic, which can give the efficient and optimal resource...
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...Didriksen Friday, August 03, 2012 In this essay I will be covering the benefits of the new monopoly, and the changes which will occur in price and output of the product in this particular type of market structure; and market structure that will most benefit the Wonks potato chip industry. The potato chip industry in the northwest was running in competitive equilibrium in 2007. In 2008 two lawyers quietly bought all the firms and created a monopolistic company called “Wonks” in order for Wonks to operate efficiently, Wonk’s had to hire a management consulting firm which then estimated a different long-run competitive equilibrium. Economist divided the market conditions into four major categories: (1) monopoly, (2) pure competition, (3) monopolistic competitive, (4) oligopoly. In a monopoly, a single business or company supplies a product and or service for which buyers cannot find a substitute. A Monopoly may arise when one company can supply a given commodity more cheaply than two more companies can. Our textbook defines a monopoly as “an industry composed of only once firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry” (Case, 2009). By purchasing all firms involved with the potato chip industry the two lawyers have created a pure monopoly. A pure monopoly is an industry with a single firm that produces a product for which there are no close substitutes...
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...SUMMARY OF REPORT I. Introduction to Four Market Structure II. Comparative Characteristics of Four Market Structures III. Four Market Structures a. Pure Competition i. Characteristics ii. Demand Curve iii. Examples iv. Summary b. Pure Monopoly v. Characteristics vi. Demand Curve vii. Examples viii. Summary c. Oligopoly ix. Characteristics x. Demand Curve xi. Examples xii. Summary d. Monopolistic Competition xiii. Characteristics xiv. Demand Curve xv. Examples xvi. Summary FOUR MARKET STRUCTURES Market structure is the selling environment in which a firm produces and sells its product The preceding chapter on the theory of production and cost made us understand the behavior of producer towards an efficient use of productive inputs because the use of inputs is associated with economic cost be it explicit or implicit cost. Efficient use of resources means proper identification of the use of the land, labor, capital and entrepreneur. These should not be underused as in 1st stage production or overused as in the 3rd stage of production, so that the cost associated to the production level can be minimized. This chapter examines a broad range of markets and explains how the pricing and output decisions of firms depend on market structure and the behavior of competitors. To determine...
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...Economic Environment of Business Assignment 1. “PEST analysis is used by businesses around the world to devise a strategic approach to their activities”. Discuss this statement highlighting the various components of the said analysis (25 marks) In this new age of economics there are several environmental factors other than industrial factors that affect a company’s performance. As a matter of fact the companies need to keep up their competitive advantages, like increasing product value or setting contingency plans for threats. These external factors can be manipulated in such a way that the company beneficiates from its impact. Environmental factors can be market, weather, client and internal factors are employees, assets of the company. To evaluate the power of those external factors, most organization performs the PEST analysis. It is a simple analysis that helps the management body to get a bigger picture of the Political, Economic, Social and Technological factors that affects the company. The study of PEST analysis concludes how the company will react to environmental change by setting up new strategies. Those external factors affects important variable in the organization that simultaneously affect the organization’s supply and demand level and eventually cost of the product. The PEST analysis is an important tool that explains the market growth or decline. It also states where the company is standing, its potentials and what or who the best business targets are...
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...Differences in the Market Structures In economics there are four main market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. Each of these market structures faces the common factor of competition. Various degrees of competition are what separate these market structures. Secondly, the commodity or product plays a huge role in these market structures because some products have substitutes or identical products. Lastly, we will observe the barriers to which a firms face when entering or exiting the market. This is a very important factor in the market structures because relative difficulty in entry and exit of the markets will determine what type of market structure we are examining. Market structures are based on two extremes known as perfect competition and monopoly. Oligopolies lie in the middle of this spectrum. A comparison and contrast of each market structure in short term and long term scenarios will be detailed in the following paper. Perfect competition and Monopoly In a Perfect competition there are four conditions that characterize the perfect competition structure: a large number of buyers & sellers, free entry & exit, product homogeneity, and perfect information. Each of these aspects is compared when examining the differences between monopoly and perfect competition. First in perfect competition there are a large number of small firms. Perfectly competitive firms’ demand curves are perfectly elastic while a monopoly’s...
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...and fixed and the firm faces a multitude of competitors, all producing perfect substitutes. In these circumstances, the purely competitive firm may sell all that it wishes at the equilibrium price, but it can sell nothing for even so little as one cent higher. Monopoly power also depends upon elasticity of the demand curve. If the demand curve is less elastic the monopolist has a greater degree of control. As the demand curve becomes more flexible or flatter the monopolist’s control starts declining. Question # 6 * There are many factors involving in the price change in pure competitive and monopoly firms. The producer can face different price from both firms. Competitive firm have many competitors so that they cannot increase or decrease price as they want but in monopoly they can. The producer always interested to get higher price so monopoly firm can pay producer more to get the products. Economics of scale may be such as to ensure that one large firm can produce at lower cost than a multitude of small firms. This is certainly the case with most public utilities. And in such industries as basic steel making and car manufacturing, pure competition would involve a very high cost. On the other hand, monopolies may...
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...DeVry ECON 312 Midterm Exam - Latest IF You Want To Purchase A+ Work then Click The Link Below For Instant Down Load http://www.acehomework.net/wp-admin/post.php?post=1964&action=edit IF You Face Any Problem Then E Mail Us At JOHNMATE1122@GMAIL.COM DeVry ECON 312 Midterm Exam - Latest Page 1 Question 1.1. (TCO 1) As a consequence of the condition of scarcity (Points : 3) there is never enough of anything. production has to be centrally planned. things which are plentiful have relatively high prices. individuals and communities have to make choices from among alternatives. Question 2.2. (TCO 1) The opportunity cost of constructing a new public highway is the (Points : 3) money cost of hiring contractors and construction workers for the new highway. value of other goods and services that must be sacrificed to construct the new highway. expected cost of constructing the new highway in a future year. value of shorter driving times and distances when the new highway is completed. Question 3.3. (TCO 1) A nation can increase its production possibilities by (Points : 3) shifting resources from investment good production to consumer good production. shifting resources from private goods to public goods. improving labor productivity. eliminating discrimination. Question 4.4. (TCO 1) Which expression is another way of saying "marginal benefit"? (Points : 3) Benefits given up Unintended gain Employment benefits Extra...
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...Course: - Edexcel HND in Business Module: - Business Environment Assignment Prepared by: Lecturer: Mr Term: Sepember-December2012 Course Start date: September2012 (Birmingham Central Campus) Introduction: This Assignment is about Business Environment and I have to complete the flowing tasks for the purpose of the assignment: Task 1 1. Types of Business Organisations, their purposes: There are three main types of Organisation in UK A) Private sector organisations. B) Public sector organisations. C) Voluntary sector organisations. The main types of Business organisation in the Private Sector is: The Sole trader: A sole trader is a business that is owned by one person. It may have one or more employees. It is the most common form of ownership in the UK. (e.g. Window cleaning, and Plumbing, etc.). Nowadays lots of people are setting up their own businesses by creating small web-based companies working from home. The Partnership: In a partnership, partners are personally liable for the debts of the business, although partners in a limited partnership (not to be confused with a limited liability partnership) who play no part in the management of the business, may have a limit on their liability set out in the Partnership Deed.. Companies: are owned by shareholders that each contributes a stock of money into a central pool. This pool of...
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