Monopoly power occurs when a firm has market dominance in an industry. (for example, more than 40% market share). Abuse of monopoly power could involve setting higher prices or limiting output. Abuse of monopoly power can lead to deadweight welfare loss, less choice, and problems for suppliers. A monopoly diagram In this diagram, the monopoly …
How to work out output, price and profit from monopoly equations. Readers Question: A monopolist operates under a production technology which allows the production of any output level at a constant average cost of $5 per unit. This monopolist sells into two distinct markets the demand curves for which are: P1=55-Q1 (for market one) and …
Readers question: Firstly, I wholeheartedly praise the magnificent work done by you in exhibiting economic knowledge and demystifying it to us, the mediocre audience. I seriously question one fact that you presented about capitalism and how it “inevitably causes monopoly”. I grew really surprised and perplexed the moment I read that in “The problems of …
I’m a good Apple consumer. Over the past few years, I’ve bought three Apple mac laptops and two iPhones. I appreciate the quality of the product and have been willing to pay more than the average price for a laptop and mobile phone. Yet, although their products are generally very good, they do irritate me …
According to Search marketing agency the Eword, Google hold 89.5% of the market share for internet search in the UK. Bing (owned by Microsoft) taks only a relatively small 6.11%. For such an important market, this is a very high market share, and shows Google has extensive monopoly power. This monopoly power has also been …
In the late nineteenth century, firms with great monopoly power were the US railroads and oil companies. These days we have a new set of monopolies, companies like Google, Amazon. For example, Amazon has over 30% of the online retail of books and DVDs. Also, a firm with a monopoly selling power like Amazon can …
Suppose a monopolist sells in a market with a demand curve p = a – bQ where p is price, Q is output and a = 25 and b = 2. The monopolist needs to replace its existing plant and machinery and has two choices. The first option is to spend $40 and produce at …
Definition of Bilateral Monopoly: A Bilateral Monopoly occurs in an industry where there is only one producer of a good and only one supplier. It means there is a monopsonist (buyer of labour) and a monopoly (single supplier) Examples of Bilateral Monopolies Coal Mining Monopsonist facing a Trade Union. In a town the coal mine …