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What is a Monopoly?

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QsId 130
Asked by GURU Lwanga
Category Personal Question
Title What is a Monopoly?
 

Highlight differences between a monopoly and a perfect competition. Where do monopolies get their power?

Tags Sources of monopoly power,market structures
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Willis OdhiamboSources of Monopoly Power Barriers to entry Number of competitors Advertising Degree of product differentiation The larger and more expensive the barriers to entry the greater the monopoly power The smaller the number of competitors in the market the greater the monopoly power The greater the advertising spend and more recognisable the brand name the greater the monopoly power The larger the degree of product differentiation the greater the extent of the monopoly power2018-06-18
Willis Odhiambo1. Output and Price: Under perfect competition price is equal to marginal cost at the equilibrium output. While under monopoly, the price is greater than average cost. 2. Equilibrium: Under perfect competition equilibrium is possible only when MR = MC and MC cuts the MR curve from below. But under simple monopoly, equilibrium can be realized whether marginal cost is rising, constant or falling. 3. Entry: Under perfect competition, there exist no restrictions on the entry or exit of firms into the industry. Under simple monopoly, there are strong barriers on the entry and exit of firms. 4. Profits: The difference between price and marginal cost under monopoly results in super-normal profits to the monopolist. Under perfect competition, a firm in the long run enjoys only normal profits. 5. Goals of Firms: Under perfect competition and monopoly the firm aims at to maximize its profits. The firm which aims at to maximize its profits is known as rational firm. 6.Profits: The difference between price and marginal cost under monopoly results in super-normal profits to the monopolist. Under perfect competition, a firm in the long run enjoys only normal profits. 2018-06-18
Willis Odhiambothe exclusive possession or control of the supply of or trade in a commodity or service. 2018-06-18
Abdihakim AdanIn a perfectly competitive market, there are many producers and consumers, no barriers to exit and entry into the market, perfectly homogenous goods, perfect information , and well-defined property rights. Perfectly competitive producers are price takers that can choose how much to produce, but not the price at which they can sell their output . A monopoly exists when there is only one producer and many consumers. Monopolies are characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods .2017-07-07

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