Chapter 24 Monopoly |
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Introduction to
Part II Product and Factor Markets II. Most Monopolies Make a Profit |
V. Economic Analysis of Monopoly VI. Dead Weight Loss
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Lecture Notes
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I. Introduction A. Part II Product and Factor Markets gives an overview of micro Markets B. A monopoly exists when one firm has continued control over a unique market. 1. By controlling supply and therefore price, a monopoly may earn high economic profit. 2. Continued existence presupposes barriers which restrict market entry and the resulting competition. D. Barriers to entry 1. Economies of scale require a. Large initial capital investment b. Large R & D expenditures 2. Ownership of raw material, strategically located land, etc. 3. Patents and copyrights 4. Unfair competition 5. Natural barriers to entry lead to natural monopolies. a. Economies of scale can be so large that more than one producer is illogical. b. Natural monopolies reduce duplication, waste, and confusion. c. Natural monopolies are often privately owned and publicly regulated. d. Example: public utilities e. 1980's,1990's deregulation lowered the importance of natural monopolies. 6. Inside Big Tech's DC Washington Survival Strategies
III. Some Monopolies Make No Profit.
IV. Some Monopolies are Regulated.
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II.
Most Monopolies Make a Profit.
E. High inelastic demand will result in a higher price, greater profit,
V. Economic
Analysis of Monopoly |