Economics - monopoly 0.0 / 5 ? EconomicsMonopolyA2/A-levelOCR Created by: TDoug05Created on: 06-02-23 11:48 charecterisitics of monoply single seller, price maker, high barriers entry/exit, unique product, potential for price discrimination, abnormal profit in the long run 1 of 16 disadvantages of monoply (prices) monoply firms set higher prices compared to competitive mkt, earning abnormal profit 2 of 16 disadvantages of monoply (consumer) due to higher prices there is a loss of consumer surplus 3 of 16 disadvantages of monoply (efficiency) monopolies are allocatively inefficient, P>MC, leads to DWL 4 of 16 disadvantages of monopoly (p.effieciency) monopolies are productively inefficient, output does not occur at lowest point on AC curve 5 of 16 disadvantages of monopoly (x-efficiency) monopolistic firms x-inefficient, less incentive to cut costs due to lack of competition 6 of 16 disadvantages monopoly (profit) earns abnormal profit leads to uneven distribution of income 7 of 16 disadvantages of monopoly (mkt power) huge market power, may use this to pay their suppliers less, e.g. costa coffee pay farmers ver little 8 of 16 disadvantages of monopoly (low competition) less incentive to invest innovate, consumers may face less choice 9 of 16 Advantages of monopoly (Eco of scale) monopolisitic firms able to take advantage of EOS, enable firms to produce at lower AC 10 of 16 Advantage of monopoly (dynamic efficiency) greater investment in R&D means more effcicent production, more choice for conusmers 11 of 16 Advantages of monopoly (Joesph Schumpeter) trade off between efficiency today and efficiency tommorow 12 of 16 Advantages of monopoly (Global markets) allows firms to compete more effectively with larger foreign firms in global markets, benefits domestic economy 13 of 16 evaluation of monopoly (industry) dependent on the industry, in some industries a monopoly can't exist 14 of 16 evaluation of monopoly (r+d) some industries needs increase in r+d, therefore monopoly needed 15 of 16 evaluation of monopoly (govt regulation) govt may be able to regulate monopoly to gain EOS, without higher prices 16 of 16
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