2. How easy or difficult is it for a new seller to enter a monopoly?3. How does a firm in a monopoly decide upon a selling price?4.What is the long-run strategy of a firm in a monopoly?5.What are some of the problems with a monopoly? Monopoly.A monopoly is the least competitive market structure. It has only one seller. There are no substitutes toa truly monopolized good, so the firm can be a price searcher (or price seeker). The firm can produceand sell its product in the sole interest of profit maxímization.A monopoly can develop for a number of reasons. A natural monopoly results when it seems impracticalfor multiple firms to control a single resource, as is often the case with public utilities, such as electricity.Also, if a firm captures economies of scale, it can prevent other firms from being able to produce at acost that would allow them to be competitive. A firm that holds a copyright or a patent has an artificialmonopoly.Monopolies can be problematic. One reason is that the product scarcity is partially contrived. A firmcan withhold resources from consumers in order to earn a higher price. A second reason is welfare loss,or "deadweight loss." When a firm withholds goods, it eventually sells fewer goods, as some consumerscan't afford the higher price. As a result, production must decrease. Although the price rises above themarket equilibrium price, there is no surplus. The lost surplus is the "welfare loss." X-inefficiency isanother reason why monopolies often take heat. Without competition, there is little incentive to keepcosts down; resources may used inefficiently.Examples of Monopolistic Markets. trash collectionpostage stampscable TV service•public transportation•electricitypatented pharmaceuticals

Answer 1 A single dealer in a market where section is simple would have next to no market power. On…

Answered: 2. How easy or difficult is it for a…

2. How easy or difficult is it for a new seller to enter a monopoly? 3. How does a firm in a monopoly decide upon a selling price? 4. What is the long-run strategy of a firm in a monopoly? 5.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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