The situations that give rise to a monopoly .

Question

Want to see more full solutions like this?

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Problem 2: At a raffle, 2000 tickets are sold at $5 each for five prizes of $2000, $1000, $500, $250, and $100. You buy one ticket. What is the expected value of your gain? 1. Find the gain for each prize. 2. Write a probability distribution for the possible gains. 3. Find the expected value. 4. Interpret the results.

This activity focuses on developing direct and supported opinions using various sources of information on the importance of the following topics: non-renewable and renewable energies, economic factors and obstacles that can affect the relationship between international trade and economic growth, devaluation of the currency in countries, and the imbalance of economic equity. In this context, it is essential that, when studying and developing these topics, students understand the concepts of the value of currencies and that leads to devaluation, non-renewable and renewable energy resources, economic development and obstacles, distribution of wealth, economic growth and external and internal constraints, and about international trade as a growth factor. Thus, the objectives that are intended to be achieved are the following: Acquire knowledge about the concepts mentioned above. Determine relationships between economic growth and international trade. Understand what some limitations that…

Consider a firm facing conventional production technology. The short run Production Function has a small range of increasing marginal product (increasing marginal returns) and then is subject to the Law of Diminishing Marginal Product (diminishing marginal returns). A. Putting quantity on the horizontal axis and dollars on the vertical axis, depict three important curves: Fixed Cost (FC), Variable Cost (VC), and Total Cost (TC). (Note that we are not asking you to depict average cost functions!) B. Please clearly indicate on this graph the range of quantities where the firm is experiencing (1) increasing marginal product and (2) diminishing marginal product. C. In a few sentences, please justify why you've made this specific classification of increasing/diminishing marginal product in part (b).

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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. dFCT Ch. 24 - Prob. 1CTQ

The situations that give rise to a monopoly .

The situations that give rise to a monopoly.

Explanation of Solution

Want to see more full solutions like this?

Chapter 24 Solutions