In a monopolistic market, however, consumer surplus is created. Monopolies cause a decrease in producer surplus. Monopoly prices cause deadweight loss.
2. United Airlines and US Airways announced today that they had called…
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What would happen if the law preventing competition in this market was removed? Explain your answer.
According to Foldvary (2010), “A "natural monopoly" is defined in economics as an industry where the fixed cost of the capital goods is so high that it is not profitable for a second firm to enter and compete. There is a "natural" reason for this industry being a monopoly, namely that the economies of scale require one, rather than several, firms. Small-scale ownership would be less efficient.” The USPS is a natural monopoly. Costs would go up if competition was allowed in this market. With natural monopolies, one firm can control an entire industry and still achieve the lowest price.
4. Patents are granted every 20 years. However, drug companies don’t have patents on new drugs for this long a time because it takes several years for FDA approval. In your opinion, should drug patents be extended for 20 years? Who would benefit? Who would not benefit?
I do not believe that drug patents should be extended for 20 years simply because of the high cost of new drugs. Many people cannot afford their medication unless it is generic. The consumer would not benefit, but the drug companies
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Alcoa is a company which owned and controlled every source of bauxite in the US and thus had a complete monopoly over the production of aluminum. There was no competitor for Alcoa till World War 11 and it enjoyed the sole ownership of all the
Microsoft antitrust behaviour investigation was because of monopoly that its product enjoyed in the market. America believes in a free market where individuals or groups have an opportunity to make a choice on what to do in the market.The operating systems that Microsoft produced dictated the machine that an individual would buy.
Therefore, products of Microsoft are complementary to the operating systems in both serves and personal computers (Economides, 2001).
The Company was investigated for antitrust behaviors due to violating the Act that prohibits companies from
The term Monopolistic Competition refers to the situation where the competitive firms of a market sell slightly different products than the competitors in order to attract more customers in the market. Many
This is because monopoly eliminates unnecessary competition by eliminating any possible generic products. In addition, certain monopolies such as copyrights encourage innovations. This encourages economic growth, since developments are dependent on innovations and
output Q > 3, the MR is lower than the MC, implying that the monopolist makes a loss on the last unit of output produced and should therefore cut back on output. Therefore, only for Q = 3 the monopolist’s benefit of producing the last unit equals the cost of producing the