Master of Business AdministrationGSFM7223 Economics for ManagersExcerpts of Reading AssignmentLESSON 4, Chapter 12: Pure Monopoly_______________________________________________________________________________________________________________Page 1An Introduction to Pure MonopolyPure monopoly exists when a single firm is the sole producer of a product for which there areno close substitutes.Single seller -A pure, or absolute, monopoly is an industry in which a single firm is the soleproducer of a specific good or the sole supplier of a service; the firm and the industry aresynonymous.Price maker -The pure monopolist controls the total quantity supplied and thus hasconsiderable control over price; it is a price maker (unlike a pure competitor, which has nosuch control and therefore is a price taker). The pure monopolist confronts the usualdownsloping product demand curve. It can change its product price by changing the quantityof the product it produces. The monopolist will use this power whenever it is advantageousto do so.Blocked entry -A pure monopolist has no immediate competitors because certain barrierskeep potential competitors from entering the industry. Those barriers may be economic,technological, legal, or of some other type. But entry is totally blocked in pure monopoly.Examples of MonopolyIn most cities, government-owned or government-regulated public utilities—natural gas andelectric companies, the water company, the cable TV company, and the local telephonecompany—are all monopolies or virtually so.Dual Objectives of the Study of MonopolyMonopoly is worth studying both for its own sake and because it provides insights about themore common market structures of monopolistic competition and oligopoly (Chapters 13 and14). These two market structures combine, in differing degrees, characteristics of purecompetition and pure monopoly.Economies of ScaleModern technology in some industries is such that economies of scale—declining averagetotal cost with added firm size—are extensive. In such cases, a firm’s long-run average-costschedule will decline over a wide range of output.If a pure monopoly exists in such an industry, economies of scale will serve as an entry barrierand will protect the monopolist from competition. New firms that try to enter the industry assmall-scale producers cannot realize the cost economies of the monopolist. They thereforewill be undercut and forced out of business by the monopolist, which can sell at a much lowerprice and still make a profit because of its lower per-unit cost associated with its economiesof scale. Show journal article Natural Monopoly and Its RegulationStanford Law Review Vol. 21, No. 3 (Feb., 1969) , pp. 548-643 (96 pages) Published By: Stanford Law Review https://doi.org/10.2307/1227624 https://www.jstor.org/stable/1227624 Read and download Log in through your school or library Alternate access options For independent researchers Read Online Read 100 articles/month free Subscribe to JPASS Unlimited reading + 10 downloads Read Online (Free) relies on page scans, which are not currently available to screen readers. To access this article, please contact JSTOR User Support. We'll provide a PDF copy for your screen reader.With a personal account, you can read up to 100 articles each month for free. Get StartedAlready have an account? Log in Monthly Plan
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Journal Information Founded in 1948, the Stanford Law Review is a general-interest academic legal journal. Each year the Law Review publishes one volume, which appears in six separate issues between November and May. Each issue contains material written by student members of the Law Review, other Stanford law students, and outside contributors, such as law professors, judges, and practicing lawyers. Approximately 2,600 libraries, attorneys, judges, law firms, government agencies, and others subscribe to the Law Review. The Law Review also hosts lectures and an annual live symposium at Stanford Law School. Publisher Information The Stanford Law Review is operated entirely by Stanford Law School students and is fully independent of faculty and administration review or supervision. The principal missions of the Law Review are to contribute to legal scholarship by addressing important legal and social issues, and to educate and foster intellectual discourse at Stanford Law School. In addition to producing a publication, the Law Review also hosts lectures and an annual live symposium. Rights & Usage This item is part of a JSTOR Collection. Why might a monopolist accept a less than maximum per unit profit quizlet?Why might a monopolist accept a less-than-maximum per-unit profit? Additional sales more than compensate for the lower profit per unit.
What is the most profitable output for a monopolist?A monopolistic market has no competition, meaning the monopolist controls the price and quantity demanded. The level of output that maximizes a monopoly's profit is when the marginal cost equals the marginal revenue.
What is the profit maximizing quantity of output for this pure monopoly quizlet?49. An unregulated pure monopolist will maximize profits by producing that output at which: MR=MC. 52.
How does a monopoly generally transfer income?The effect of the monopoly power is to transfer income from consumers to business owners. This will result in a redistribution of income in favor of higher-income business owners, unless the buyers of monopoly products are wealthier than the monopoly owners.
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How much will a profit-seeking monopolist produce if producing is preferable to shutting down?
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