...5.2.3 Monopoly Market Mono means one and poly means seller. Therefore, meaning of the word monopoly is only one seller. The dictionary meaning of the word monopoly is the sole right to produce and sell a good by a person, government or corporation. Therefore, when a farm produces a good and supplies it to innumerable customers, then the farm is called a monopoly business and the market where that good is bought and sold is called the monopoly market. The farm that achieves the monopolistic right to sell a good, that farm controls the supply of the good in the market. Up to a fixed period of time, no other farm than this particular one can produce that good, so there is no difference between a farm and an industry in the monopoly market. A completely monopolistic market may be a bit difficult to be found. But a number of examples can be given of the almost monopoly market. For example, Bangladesh oxygen, Titas gas, etc. Task: Make a list of the goods that are bought and sold in the monopoly market. 5.2.3 Characteristics of Monopoly Market The following characteristics can be identified if the monopoly market is analysed. 1. The seller controls the production or supply: In a monopoly market, there is only one producer or seller. Therefore, the seller is the one who controls the production and supply of the good in the market entirely. 2. There is no near alternative good: There is no near alternative good for the product produced and sold by the monopolistic...
Words: 417 - Pages: 2
...Assignment #2 – Market Structure: Monopoly and Monopolistic Competition ECO550: Economics for Managers Assignment 2 Office building maintenance plans call for the stripping, waxing, and buffing of ceramic floor tiles. This work is contracted out to office maintenance firms, and both technology and labor requirements are very basic. Supply and demand conditions in this perfectly competitive service market in New York are: |QS = 2P - 20 |(Supply) | | | | |QD = 80 - 2P |(Demand) | where Q is thousands of hours of floor reconditioning per month, and P is the price per hour. |A. |Algebraically determine the market equilibrium price/output combination. | When calculating for equilibrium, QS = QD 2P – 20 = 80 – 2P 4P = 100 P = 25 When substituting the value of P in the equation for supply and demand, we calculate the value of Q as QS = 2P – 20 QS = 2*25 – 20 QS = 30 Equating both supply and demand and solving it for Q 2p+2p=80+20 4p = 100 P = $25 Q = 30 (thousands of hours) |B. |Use a graph to confirm your answer. | ...
Words: 360 - Pages: 2
...Market structures are traditionally distinguished between four types i.e. perfect competition, monopoly, monopolistic competition and an oligopoly. They are determined on the basis of the number of firms in the market, the type of product, whether homogenous or differentiated and whether barriers to entry exist or not. Due to various specifications of all structures a “casual chain” is seen running from the market structure to the performance of that industry (Sloman, J. Hinde, K. pp 222) A monopoly involves one firm producing a good without close substitutes; that coincides with the firm. Barriers to entry exist thus making it difficult for new entrants to penetrate the industry and be a threat. The concept of the monopoly is relative since it crucially depends on how broadly or narrowly the product and the market are defined as. A monopoly firm can set the price as it is a price setter thus it has a certain degree of monopoly power that is determined by the difference between price charged and marginal cost expressed as a proportion of price. Monopolists can choose either the price or the level of output, but not both as it still faces a negatively sloped demand curve. Thus the monopoly firm does not have a supply curve. (Sloman, J. Hinde, K. 2007) For the monopoly firm to make supernormal profits it has to be a profit-maximizing firm. Therefore the firm shall not choose a rate of output Q that corresponds to the price inelastic segment of the demand curve. It will locate...
Words: 673 - Pages: 3
...Reference journal for getting an Idea on how to write the term paper. Journal of Industrial Engineering and Management is a semestral, open access scientific journal that publishes theoretical and empirical peer-reviewed articles, which contribute to advance the understanding of phenomena related with all aspects of industrial engineering and industrial management. JIEM includes contributions, but not limited to, in the following fields: (1) Production, Logistics, Quality, and Operational Research; (2) Information Systems, Technology and Communication; (3) Industrial Economics and Regional Development; (4) Management, Organizational Behaviour and Human Resources; (5) Finance, Accounting and Marketing; and (6) Education, Training and Professional Skills. Term Paper can focus on Mapping new frontiers in emerging and developing technology areas in research, industry and governance.. Some Abstracts which emphasis on the Technology and Marketing. These are abstracts of articles which are already published. These are for your reference and you can start working in the same way concentrating on Technology and Marketing. * Trial-and-Error Marketing: The Role of the Customer in Tech Start-ups by Fabian Eggers, Deborah Brown McCabe Abstract: This paper explores the role of a customer- or product-centric focus in young technology firms decision-making and whether the behaviors of these firms differ from textbook marketing. rnData from depth interviews with founders of growth-stage...
Words: 3174 - Pages: 13
...Differences in the Market Structures In economics there are four main market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. Each of these market structures faces the common factor of competition. Various degrees of competition are what separate these market structures. Secondly, the commodity or product plays a huge role in these market structures because some products have substitutes or identical products. Lastly, we will observe the barriers to which a firms face when entering or exiting the market. This is a very important factor in the market structures because relative difficulty in entry and exit of the markets will determine what type of market structure we are examining. Market structures are based on two extremes known as perfect competition and monopoly. Oligopolies lie in the middle of this spectrum. A comparison and contrast of each market structure in short term and long term scenarios will be detailed in the following paper. Perfect competition and Monopoly In a Perfect competition there are four conditions that characterize the perfect competition structure: a large number of buyers & sellers, free entry & exit, product homogeneity, and perfect information. Each of these aspects is compared when examining the differences between monopoly and perfect competition. First in perfect competition there are a large number of small firms. Perfectly competitive firms’ demand curves are perfectly elastic while a monopoly’s...
Words: 2639 - Pages: 11
...------------------------------------------------- Monopoly From Wikipedia, the free encyclopedia This article is about the economic term. For the board game, see Monopoly (game). For other uses, seeMonopoly (disambiguation). "I Like a Little Competition"—J. P. Morgan by Art Young. Cartoon relating to the answer J. P. Morgan gave when asked whether he disliked competition at the Pujo Committee.[1] A monopoly (from Greek monos μόνος (alone or single) + polein πωλεῖν (to sell)) exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry).[2]Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods.[3] The verb "monopolise" refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices.[4] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[4] A monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service; a monopoly may also have monopsony control...
Words: 10774 - Pages: 44
...The Affects of Monopolies on Our current Microeconomic Situation More than anything else, the progress of the world in the 21st century depends on economics. The microeconomic situation of the United States has several determining factors contributing to it's current status. What we earn, what we save, what we spend, how deligently we work and retain our jobs is all part of the microeconomic system that controls our daiy lives. Another large factor hindering the success or downfall of the current economy is the effect of monopolies. By defintion a monopoly is a large company that has exclusive control of a commodity or service in a particular market giving them the power to manipulate prices. In a sense a monopoly is the logical result of competition. The roles of a monopoly in microeconomics severly affect the manner in which individual businesses can effectivly conduct their business in more than one way. Monopolies have forever affected our economy but these following pages are more of a generalized overview of the affects they have had strictly in the 21st century. One role of a monopoly in microeconomics is the effect it has on the pricing of goods and services. Monopolies can impact consumer prices in two obviously different ways, they can cause prices to drop so low that it forces companies out of business, or it can cause prices to skyrocket making it difficult for consumers to purchase a product. Neither of these options are necessarily good for the consumers...
Words: 933 - Pages: 4
...MARKET STRUCTURE IN BANGLADESH QUESTION Question 3 (44 marks) Please note that this question requires substantial research Part A – (8 marks) Explain monopoly and monopolistic competition market structures, and identify the key factors that distinguish them Part B – (18 marks) Choose two different industries from your home country representing monopoly and monopolistic competition market structures. Identify their key characteristics in relation to the factors used to differentiate between the market structures. Using the real 5/5 data from your case studies analyse how well each case study fits with the different market structures. Part C – (6 marks) For the monopoly firm in your case study, identify the potential market power that it has and the types of controls (if any) that are in place to limit this. Part D – (6 marks) For the monopoly firm in your case study, identify if there are other benefits generated by the monopoly that would be difficult to gain from a monopolistic competition market structure. Part E – (6 marks) For the monopolistic competition industry, identify the extent to which firms are able to differentiate their products, and whether this allows them to gain some price advantages. SOLUTION Monopoly and monopolistic competition market structures Monopoly Market Structure The monopoly is understood to be the market structure associated with single seller of a product which has huge demand either as a result of necessity or because...
Words: 2478 - Pages: 10
........................................... 10 Monopoly power and firm pricing decisions If monopoly persists, monopoly will always sit at the helm of government … its bigness is an unwholesome inflation created by privileges and exemptions which it ought not to enjoy. If there are men in this country big enough to own the government of the United States, they are going to own it. Woodrow Wilson That competition is a virtue, at least as far as enterprises are concerned, has been a basic article of faith in the American Tradition, and a vigorous antitrust policy has long been regarded as both beneficial and necessary, not only to extend competitive forces into new regions but also to preserve them where they may be flourishing at the moment. G. Warren Nutter and Henry Alder Einhorn t the bottom of almost all arguments against the free market is a deep-seated concern about the distorting (some would say corrupting) influence of monopolies. People who are suspicious of the free market fear that too many producers are unchecked by the forces of competition, but instead hold considerable monopoly power or control over market outcomes. Unless the government intervenes, these firms are likely to exploit their power for their own selfish benefit. This theme has been fundamental to the writings of economist John Kenneth Galbraith: The initiative in deciding what is produced comes not from the sovereign consumer who, through the market, issues instructions that bend the productive mechanism...
Words: 12857 - Pages: 52
...Nicholas Messina Econ201 What are some of the different types of barriers to entry that give rise to monopoly power? Give an example of each. Should government let monopolists exist or not? What are the benefits of monopoly market structure and what are those shortcomings related to monopoly? What is your opinion? (At least two pages and write down the answers to each question asked) In a perfectly competitive market, there are many firms, none of which is large in size. In contrast, in a monopolistic market there is only one firm, which is large in size. This one firm provides all of the market's supply. Some conditions that determine a monopolistic market is the fact there is only one firm competing and has entire control over supply of product with no close substitutes. The second is that there must be a high barrier to entry to explain why other firms have not yet entered the market. What are some of the different types of barriers to entry that give rise to monopoly power? Barriers to entry are defined as legal, technological, or market forces that may discourage or prevent potential competitors from entering a market. There are many different types of barriers that include government barriers, control of a physical resource, technological advancements, and large start-up costs. Governments may erect barriers that prohibits or severely limits new competitors. This is done in many cities and states that may allow a household to only use one certain energy, water...
Words: 849 - Pages: 4
...Time: 11/05/2012 Google's Monopoly and Internet Freedom By JEFFREY KATZ Wall Street Journal, June 7, 2012 http://online.wsj.com/article/SB10001424052702303830204577448792246251470.html Never is the issue concerning monopoly and perfect competitive market failing to attract our eyes. And this is also a hot topic we discussed in our economics course. According to the article, Google, the most popular search engine in the world, controls nearly 82% of the global search market and 98% of the mobile search market. Its annual revenue is larger than the economies of the world's 28 poorest countries combined. And its closest competitor, Bing, is so far behind in both market share and revenue that Google has become, effectively, a monopoly. A monopoly refers to a situation wherein there is a single seller of a product or service for which there are no close substitutes. A single company dominates its area; squeezes out all its competitors thus gaining control over the entire market and inevitably can dictate the price of the product or service. While in the perfect competition market, many firms produce identical products, and competition forces them all to sell at the market price. Firms face perfectly elastic demand curves at the price determined in the market because no firm is large enough to affect the market price. Compared with perfect competition, monopoly is inefficient. First of all, monopoly will create the deadweight loss for the market. A deadweight loss is a loss...
Words: 558 - Pages: 3
...Perfect competition is “a market structure where competition is at its greatest possible level” (The Economic Times, 2016). In this market, entry and exit is very easy and also free as there are many firms, both sellers and buyers who all produce homogenous items. Firms are price takers because they cannot control the price of their products, as they are determined by the interaction of demand and supply in the entire market. Another characteristic in this market is that the producers and the consumers have total awareness of products including prices as well as the costs of the market, quantity and availability (Sloman, Hinde and Garratt, 2013), hence the mobility of the factors of production is perfect in the long run in this market. Being price takers, to achieve the aim of profit maximisation, firms produce a level of output where price equals marginal cost (MC) of producing an extra unit of product. Profit is maximised where marginal revenue (MR) is equal to MC because price is also the MR for competitive firms. Monopoly is the opposite of perfect competition due to a single firm owns and serves the entire market because there is no competition available. There is “only one provider of a good or service, great barriers to entry for seller, no barriers to entry for buyer” (Econ Guru, 2006). This often then leads to high prices and mediocre products being sold, however very unique. Monopolies are price makers because they control the market and their prices are set higher...
Words: 1099 - Pages: 5
...Monopoly is nearly always seen as something undesirable. Courts have wrestled with monopoly for ages, sometimes defining it as: "the power to control prices and exclude competition", "restraining trade", or "unfair and anti-competitive behavior." Should monopolistic practices be condemned and outlawed? Let's look at anti-competitive behavior and practices, but let's not confine ourselves to what's traditionally seen as monopoly. Monopoly means that a firm is sole seller of a product without any close substitutes, controls over the prices the firms charge. Government sometime grants a monopoly because doing so is viewed not only to be in the public interest, but also to encourage it with price incentives. However, monopolies fail to meet their resource allocation efficiently, producing less than the socially desirable quantities of output and charging prices above marginal cost. Thus, this inefficiency of monopoly causes the quantity sold to fall short of social needs. Law The existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high-market-share company's price increases. Competition law does not make merely having a monopoly illegal, but rather abusing the power a monopoly may confer, for instance through exclusionary practices (i.e. pricing high just because you are the only one around.) It may also be noted that it is illegal to try to obtain a monopoly, by practices...
Words: 749 - Pages: 3
...Market Structures Adam Timothy Rider ECO204: Principles of Microeconomics Evelyn Carlson 10/13/2014 When trying to gain insight into the local economy it is very important to understand the big picture of how the various market structures relate to each other. This can be accomplished by putting together some of the smaller pieces or characteristic of the market structure. These characteristics can be organizational, competitive or a variety of other features that categorize a firm as a specific market structure. Individual market structures can be described as the amount of firms producing identical goods and services. If you can identify the market structure you can often identify how they firms within the structure are going to price their products in the industry. The market structure will have an effect on the supply and demand of the different commodities in the market. The market structure will also influence barriers for entry and exit in the industry. In order to understand these structures in an economic community you must obtain an understanding of how they all work together to form the economic community. By the end of this report you will possess the necessary knowledge to understand the market structures in the micro economy. Before we begin to the inevitable breakdown of the individual market structures it is important to identify some of the key features of market structure in general. First it would be important to look at the...
Words: 2943 - Pages: 12
...Market Structure and Maximizing Profits There are four structures that exist within a market. These four are perfect competition, monopolistic competition, monopoly, and oligopoly. I will explain each market structure, and define what they are. I will also discuss how each structure works, and how each form maximizes the companies’ profits. I will also explain how to find the maximum possible price for an object before the company will start to lose money. If the company is not making a profit the company may go bankrupt. The company must pay attention to its market structure along with its own profit margins. The following are some characteristics of a company’s market structure. “These characteristics are: (a) number of firms in the market, (b) control over the price of the relevant product, (c) type of the product sold in the market, (d) barriers to new firms entering the market, and (e) existence of non-price competition in the market” (Sahu, pg.1, 2010) By determining how many companies are in a specific market you can determine the amount of competition there is producing the same product. What the product is will determine if the item is being supplied in a competitive market structure or a monopoly. This will also determine the amount of profits made by the company on the item. There are a few barriers that can hinder a company from entering a market. These barriers are product availability, ownership, patents, and if the company owns the items original location...
Words: 1168 - Pages: 5
