Principles And Applications Of Economics (microeconimics)

What are the causes and consequences of monopoly ? Why do economists recommend pro-competition policies The virtually underlying definition of a monopoly is a firm which exists alone in the entire exertion . However , it depends on how narrowly the industry is defined - what matters is how much power the monopoly holds varying with the amount of substitutes functional in the market by rival firms (Friedman , 2002 . For example , a cafeteria owner has monopoly in a university , but does not rent a monopoly in the entire vicinity .

Like any(prenominal) other thing , there are two sides to monopolies - it has its advantages and disadvantagesBARRIERS TO ENTRYThe most evident property of a monopoly is the barriers to entry which are the blockages and obstacles for bleak firms for entering the industry Barriers to entry include factors such as economies of scale this is the reduction of cost per unit as the take aim of harvest-feastion increases Since monopolies are the only firms in their respective industries , they clear up the entire market demand (Grant , 2002 . To supply for that , the production level is huge which gives the firm an economies of scale unlike other clean firms who produce only a small amount . as well as , the cost of production for an established firm is always freeze off than a new firm because the new firm call for to make many expenses before it can settle raft properly in the marketAnother barrier to entry is product specialism which is a clear distinction of one company s product it...If you want to get a full essay, order it on our website: Ordercustompaper.com

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