Economic Essays

Words: 7528
Pages: 31
Open Document
CHAPTER 24
Pure Monopoly

A. Short-Answer, Essays, and Problems

1. What are the major characteristics of pure monopoly?

2. What are the major barriers to entry that explain the existence of monopoly?

3. What is the relationship between economies of scale and a natural monopoly?

4. Some economists argue that pure monopolists will purposely avoid the price-output combination that will maximize their profits. Explain how this less-than-maximum profit behavior could be rational.

5. In what ways, if any, do the demand schedules for a purely competitive firm and a pure monopolist differ? What significance does this have for the price-output behavior of each?

6. Why …show more content…
Is the profitability of a firm’s operation a good index of the degree of monopoly power it possesses?

14. Do you agree or disagree with the statement that: “A monopolist always charges the highest possible price.” Explain.

15. “Pure monopoly guarantees economic profits.” Discuss whether this is a valid statement.

16. How does monopoly compare with pure competition in terms of price, output, and efficiency?

17. Explain how monopoly causes an inefficient allocation of resources when the competitive firm does not, even when both seek to maximize profits.

18. How does monopoly result in income transfers?

19. How does simultaneous consumption affect economies of scale?

20. What are network effects? How do they contribute to economies of scale?

21. What is X-inefficiency? Why is it likely to occur in monopoly?

22. Draw a graph that illustrates X-inefficiency. Explain the concept of X-inefficiency using the graph.

23. What is the relationship between rent-seeking expenditures and monopoly?

24. What are three policy options for dealing with pure monopolies that are entrenched and inefficient?

25. Price discrimination is often used by businesses. Explain the conditions under which price discrimination is practiced and the economic consequences of price
Show More

Related Documents: Economic Essays

Economics: Economic Majors And Departments

ECONOMICS MAJORS AND MINORS Economics is considered one of the most flexible of all the potential fields of undergraduate study. A major in economics can be pursued either through the College of Arts and Sciences (BA) or the Boler School of Business (B.S). BA in economics can be easily combined with a minor or concentration in some other area of study. STUDENT ORGANIZATIONS The Economics Association – student organized and managed association with…

Words 579 - Pages 3

Economic Growth And Economic Factors

Economic Factors Factors Businesses are affected by the economy An economy describes how a country spends its money This is determined by 5 factors Economic Economic Growth Growth Exchange Exchange Rates Rates Inflation Inflation Economic Economic Factors Factors Balance Balanceof of Payments Payments Unemployment Unemployment © Business Studies Online: Slide 1 Economic Growth Growth This measures how much extra an economy has produced this year compared to last year The total amount produced in an economy is called:…

Words 832 - Pages 4

Economics: Economics and Principle Essay

the most a car to get around or a house to live in with your family. This principle also would be where you would decide in the house what you need or you do not. The next principle would be six which is Markets Are Usually a Good Way to Organize Economic Activity. I believe that this one would be important also because when you buy a house you would have to decide the market and where you want to live if deciding to get loans you would have to decide how to pay them off over the years. The last…

Words 339 - Pages 2

Heterodox Economics And The History Of Economic Thought

Heterodox economics and the history of economic thought Carlo D’Ippoliti and Alessandro Roncaglia This is probably all one can ask of history, and of the history of ideas in particular: not to resolve issues, but to raise the level of the debate. (Hirschman 1977, 135) The declining role of the history of economic thought (HET) in university research and teaching has been increasingly under debate. Many historians often recall the relationship between HET and heterodox economics (HEC), considering…

Words 8158 - Pages 33

Economics: Economics and Comparative Advantage Essay

to metropolitan economies, then expanding the scope of production either ”downstream” to include processing or upstream to include the inputs needed for producing the resources. Some argue that exportation of raw materials can trigger sustainable economic growth – while others argue that reliance on commodity export can constitute a development trap. The staples model is any model that incorporates the important assumptions of the staples thesis into it. 5) Absolute advantage: When one producer…

Words 2451 - Pages 10

Economics: Economics and Pure Competition Essay

and Pure Monopoly, which has differentiating characteristics; however, the main focuses during Microeconomics was the comparison and contrast of Pure Competition and Pure Monopoly. Some of these unique characteristics identify why monopolist earns economic profits, why the demand curves are different in relation to price, and lastly, why productive efficiency and allocative efficiency is satisfied with pure competition and not pure monopoly (McConnell). Pure Competition versus Monopoly characteristics…

Words 776 - Pages 4

Difference Between Economic And Economic Power

Ralu Nwosu Civic and Economics Mr. Manriquez 9/22/13 How should political and economical power be distributed in a society. Economic power should be held by those who have earned it. Political power should be held by elected officials who are responsible to their constituents. Since we have power is divided in our society most of the power is in our politicians we trust in and give our votes to. But when it comes to economical, some of the richest people in society share it too,…

Words 348 - Pages 2

Economics and Recession Economic Theories Essay

studies broader issues of the whole nation such as inflation, unemployment and national output (GDP) * Government uses monetary and fiscal policy to * Smooth out fluctuations in our business cycle * To help us get out of recession Economic theories and models * Shows complex relationships in a simple way * Do it through the use of graphs and equations * It’s the simplest and most effective way to show and demonstrate data and complex ideas * Use simplified models to…

Words 756 - Pages 4

Economics and Financial Economics Course Essay

another, successfully applied their logical and analytical capability to the study of economics at university and higher level to build up a sound career as well as contribute to the development of the economy. Such stories inspired me to pursue a bachelor degree in banking and finance rather than become a scientist. At university, I studied a number of interesting subjects relating to mathematics, economics and finance. With strong background in mathematics and IT, together with a scientific and…

Words 1038 - Pages 5

Economics and Overall Economic Growth Essay

The economic state of the country and consumer confidence can help the growth and development or harm it. “In recessionary times, consumers begin limiting their purchases to the essentials, foregoing luxury or big-ticket items. Companies also scale back production, hiring and the development of new products and services to ensure that their finances can weather the storm. In periods of overall economic growth, these companies once again expand”. (Mohr, 2014) The opposite is true in businesses that…

Words 468 - Pages 2