ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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More than one firm producing a variety of goods
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1. One firm2. No variety of goods3. Complete barriers to entry4. Complete control over price
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Either A or B
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None of the above
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Detailed explanation-1: -The characteristics of monopoly include: (1) one firm, (2) one product, and (3) no entry (Table 5.1). The monopoly solution is shown in Figure 5.2. Note that long-run profits can exist for a monopoly, since barriers to entry halt any potential entrants from joining the industry.
Detailed explanation-2: -A monopoly is a business that is characterized by a lack of competition within a market and unavailable substitutes for its product. Monopolies can dictate price changes and create barriers for competitors to enter the marketplace.
Detailed explanation-3: -Description: In a monopoly market, factors like government license, ownership of resources, copyright and patent and high starting cost make an entity a single seller of goods. All these factors restrict the entry of other sellers in the market.
Detailed explanation-4: -The sources of monopoly power include economies of scale, locational advantages, high sunk costs associated with entry, restricted ownership of key inputs, and government restrictions, such as exclusive franchises, licensing and certification requirements, and patents.
Detailed explanation-5: -Natural Monopoly. Only one company providing a public good or service. Technological Monopoly. When a single firm has exclusive rights over the technology used to manufacture it. Geographic Monopoly. Government Monopoly. Least Threat: Four Types of Monopolies.