PPT-9 | Monopoly

How Monopolies Form and Survive Barriers to Entry How a ProfitMaximizing Monopoly Chooses Output and Price What are the Welfare Effects of a Monopoly A pure monopoly is where one. 1. . Graphs and Tables Copyright . © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Antitrust policy. Main purpose. : prevent monopolization, promote competition, and achieve . allocative. Banking Trade: . seigniorage. , risk-shifting, and more. By Marcus . Miller and Lei . Zhang. University of Warwick . 1. 2. ‘There are few ways a man may be more innocently employed than in getting money’.. HUBBARD. Economics. FOURTH EDITION. ANTHONY PATRICK. O’BRIEN. Chapter Outline . and. Learning Objectives. 15.1. Is Any Firm Ever Really a Monopoly?. 15.2. Where Do Monopolies Come From?. 15.3. How Does a Monopoly Choose Price and Output?. Inefficiency of Monopoly. Competitive Outcome. P = P. C. = MC. Q = Q. C. Monopoly Outcome. P. M. > P. C. = MC. Q = Q. M. < Q. C. MR. D. MC. Q. M. P. M. Q. C. Comp. Monop. CS. PS. Welfare. DWL. Types of Market Structure. Four principal models of market structures:. Perfect Competition. Many producers sell identical product. Monopoly. Single producer sells a single, undifferentiated product. What does monopoly mean?. . “. monos. ” = one “. polein. ” = seller. Not a new phenomenon .  Thales, Aristotle. Necessary conditions. Single seller . Examples: most public utility companies and patented drugs.. 5. 24. 3. 11. Why are Entry Barriers. Sometimes High?. Entry Barriers. A few examples of factors that may serve as . ‘. barriers. ’. to free entry into a market:. economies of scale. government licensing. 5.3.3. Learning Outcomes. To understand the meaning of the term ‘monopoly’.. To appreciate what is meant by monopoly power and how this can influence a firm’s behaviour.. To understand the main disadvantages and advantages of a firm having monopoly power. . Copyright © 2017 Pearson Education, Inc. All Rights Reserved. Is Any Firm Ever Really a Monopoly?. We define monopoly.. Monopoly. is a market structure consisting of a firm that is the only seller of a good or service that does not have a close substitute.. (1740-1796). Chris . Nierstrasz. . (University of Warwick). Non-state actor . vs. State actor. 17 November 1757, Van der Parra to Van Eck:. ‘It is essential not to accede to the request of the Armenians of Madras, and if feasible also to achieve an interdiction on the sending of cloths by the Moors and merchants from the Malabar. This is to clear the way for those, who would otherwise be prevented from making an acceptable profit, and who would find themselves in [financial] difficulties because of these heathens.’ . AP Microeconomics. Mr. Bordelon. Quantity (Megawatts). Price. per Megawatt. Total Cost. 1. $550. $1,000. 2. 500. 1,075. 3. 450. 1,200. 4. 400. 1,375. 5. 350. 1,600. 6. 300. 1,875. 7. 250. 2,200. 8. 200. MARKET STRUCTURE . in which only . ONE . seller sells a product for which there are no close substitutes.. A monopoly is . A PRICE SETTER. , . RESTRICTS THE MARKET . and. IS THE ONLY SELLER.. Monopoly. Marginal Revenue (MR): . Change. in the firm’s total revenue resulting from a . one unit change. in production.. Marginal Cost (MC): . Change. in the firm’s total cost resulting . from . a . one unit change . One firm selling good or service with no substitutes. Barriers to entry that prevent competition from new firms. What is a monopoly?. Monopoly in the news. Natural. One firm can meet demand at a lower ATC than two or more firms.