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Importance of elasticity of demand and supply?
exploitation of monopoly power in market-the extent to which a firm or firm with monopoly power can raise price in market to extract consumer surplus and it into extraprofit
When does a firm have market power?
A firm is a monopoly if it is the sole seller of its product and if its product has no close substitutes.
When a firm has little ability to influence market prices it is said to be in what kind of a market?
Imperfect monopoly
Under what market structure does the firm have the most control over prices?
Monopoly
Why is a Monopoly markets undesirable RELATIVE to perfect competitive market discuss?
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
Importance of elasticity of demand and supply?
exploitation of monopoly power in market-the extent to which a firm or firm with monopoly power can raise price in market to extract consumer surplus and it into extraprofit
When does a firm have market power?
A firm is a monopoly if it is the sole seller of its product and if its product has no close substitutes.
When a firm has little ability to influence market prices it is said to be in what kind of a market?
Imperfect monopoly
Under what market structure does the firm have the most control over prices?
Monopoly
Why is a Monopoly markets undesirable RELATIVE to perfect competitive market discuss?
In Monopoly, there is no market power as the monopoly firm is the only supplier and holds pricing power. However in a perfect competitive market, prices are set by interaction of supply and demand. This is why monopoly markets are undesirable relative to perfect competitive market.
What do you call a business that controls a market and no competition?
A monopolistic firm is a firm that controls the market. This is only possible with scarce competition (little to none.) The market structure is called a monopoly when this happens.
What best describes the market structure of a monopoly?
A monopoly is when a market has many buyers but only one seller.
Example of dominant-business firm?
A dominant business firm is close to a monopoly. It has no close competitors, and dominates more than half of the market that it is in.
Are eBay and Amazon examples of monopolistic competition?
A monopoly is when one firm has a controlling share in the market. As such he can set the price. eBay is a monopoly Amazon WAS a monopoly but is now simply an online retailer
How is a monopoly and a perfectly competitive firm similar?
A perfect competitive market and pure monopoly market both have to follow the "law of demand".
List similarities between perfectly competitive and monopoly?
There are not many similarities between a perfectly competitive market and a monopoly. In a perfectly competitive market there are no barriers to exit and enter the market. If there are excess profits being made in this market other firms will enter the market to try and get a share of those profits. Since there are many markets with a equal piece of the market share each firms production decision will have little or no effect on the market. Because of the firm's relative size to the market it must be a price taker. If the firm tries to increase the price in a perfectly competitive market then no consumers will buy from that firm because there are numerous other firms that sell that the same good. The price maximization condition of the competitive market is marginal cost equals marginal revenue. In a competitive market marginal revenue is the same as demand because the firm can sell as many as it wants in a competitive market. In a monopoly, the firm is the price setter. It is the only firm that is supplying so it has price setting power. The price maximization condition of a monopoly is marginal cost equals marginal revenue but with a caveat. Marginal revenue does not equal the demand curve, but is derived from the demand curve. Since the firm is the only supplier, assuming it cannot practice price discrimination, it must lower its price in order to gain more customers so the people who would pay a high price are paying a lower price because the firm wants to sell its products to more customers.
What market works runs most efficiently when one large firm supplies all output?
natural monopoly =)
