Basics of Monopoly

I will discuss why monopoly power in some companies is has beneficial impacts to some consumers and why such a power may be criticised. What is monopoly? A monopoly is a quick which dominates a product to the extent in which it effectively becomes the supply. When a monopoly occurs there is no possible substitute for the product. Under mean(prenominal) circumstances, the bell of a product is set by a merchandise equilibrium in which a household and its competitors declare a similar price for a product. If a securely attempts to increase the price of a product, it will result in little to no sales because its competitors will be change the same product at a lower price. However, as monopoly is the sole producer of the product it has the power to set the market place price. Below is a graph which shows the take up curve in a monopoly firm and a competitive firm. As you discount see the demand curve for a competitive firm is a straight caudex, as demand will about remain the same at the equilibrium price. Even when the price is lowered by a firm, it will result in its rivals also lowering its prices which will still keep the demand curve balanced as a straight line meaning demand is in-elastic. However as a monopoly controls the market price, a downward sloping demand will occur.

At a higher price demand is lower even; there will still be consumers willing to obtain the product as they are the only firm merchandising the product indicating demand is elastic. There are barriers of ledger entry to firms in aiming to become a pure monopoly. The first barrier of entry is patents and copyright. Patents and copyrights are given to a firm by the presidential term a that nation i.e. in the U.S. if a firm registers an art with the government, a monopoly will be granted to the firm disenable other companies to make use of the given product without the allowance of the company. A prime example of a company which flora with patency is Intel co. who use patents and copyrights to stop rival companies (i.e.... If you want to demoralize a full essay, order it on our website: Ordercustompaper.com

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