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Part II Product and Factor Markets
previews market models discussed in chapters 23-29.
IV. Some Monopolies are Regulated
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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
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 Washingtin Survival Strategies
Most Monopolies Make a Profit.
III. Some Monopolies Make No Profit.
A. Rising costs and shrinking demand may result
in a monopoly not making a profit.
B. When this happens, demand (average revenue)
is always below the ATC and a loss results.
Analysis of Monopoly
Monopolies are Regulated.
E. Additional Materials