The situations that give rise to a monopoly .

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Answer 1

Question

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

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1. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter." a. Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. b. Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient. c. Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose. d. Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.

Answer 2

Question

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

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Answer 3

Question

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

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Answer 4

Question

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

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Answer 5

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

Answer 6

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

Answer 7

Chapter 24, Problem 24.1LO

To determine

The situations that give rise to a monopoly.

Answer 8

Expert Solution & Answer

Explanation of Solution

Monopoly is the market structure in which a single firm serves the entire market. The following factors, acting alone or in combination, give rise to a monopoly:

a. Control over key inputs - Monopoly can arise due to the sole ownership or control of certain essential inputs needed in a particular industry. For example, DeBeers Company of South Africa controls about 80 per cent of the world’s production of diamonds. This has caused DeBeers to have substantial monopoly over Diamonds market.

b. Economies of scale - Economies of scale exists when production costs fall as the scale of the business increases and output is produced in a greater volume. Thus, if there are economies of scale in production, then existing firms will be larger and have a cost advantage over potential entrants which deter new entrants.

c. Patents - A patent refers to an exclusive right granted by the government to an inventor or assignee for a limited period of time. These patents act as a reward to private companies for engaging in research and development activities and come up with new products or new technologies. Thus, firms holding patents act as a monopoly.

d. Cartels - Under cartels, firms agree among themselves to restrict their total output to the level that maximizes their joint profits. These firms retain their individual identities but coordinate their output and pricing policies in order to act as a monopoly.

e. Government licenses - Licensing refers to the special permission needed from the government for entering a particular industry. Licensing is used to ensure minimum standards of competency. Thus the government can create a monopoly by not granting licenses to new firms.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Introduction:

Monopoly refers to a market in which there is only a single seller of a commodity. The seller has complete control over the product price. The demand curve faced by a monopoly is downward sloping. This implies that the monopoly can sell more goods only by lowering its price.

Answer 12

Ch. 24 - Prob. 24.1LO Ch. 24 - Prob. 24.2LO Ch. 24 - Prob. 24.3LO Ch. 24 - Prob. 24.4LO Ch. 24 - Prob. 24.5LO Ch. 24 - Prob. aFCT Ch. 24 - Prob. bFCT Ch. 24 - Prob. cFCT Ch. 24 - Prob. 1CTQ Ch. 24 - Prob. 2CTQ

The situations that give rise to a monopoly .

The situations that give rise to a monopoly.

Explanation of Solution

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