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Monopoly
| Question | Answer |
|---|---|
| What are the characteristics of Monopoly? | Sole supplier in the industry, Controls either price or quantity supplied, Maximises profit, Barriers to entry. |
| What are the sources of Monopoly Power/What are the barriers to entry in the industry? | Legal/Statutory Monopoly, Ownership of a Patent/Copyright, Ownership of Raw Materials, Economies of Scale/Large capital investment, Cartels/Collusions, Mergers/Takeovers, Brand proliferation. |
| What shape is a demand curve facing a monopolist? | Downward sloping from left to right. |
| What shape is the marginal revenue curve facing a monopolist? | Downward sloping but is declining faster than the demand curve. |
| Outline the equilibrium position facing a monopolist in relation to SNP, Price and Equilibrium? | S-SNP is earned because AR>AC. P-Price. The firm produces Q1 and sells it at P1. E-Equilibrium. This occurs at point E where MC=MR and MC is rising faster than MR. |
| Outline the equilibrium position facing a monopolist in relation to cost of production and scarce resources? | C-Cost of production. The firm isn't producing at the minimum point of the AC. S-Scarce Resources. Since the company isn't producing at the lowest point of the A, it is considered to be wasting scarce resources. |
| Outline three similarities between imperfect competition and monopoly? | Neither produces at the lowest point of the AC. Both facing downward sloping demand curve. Both, price is greater than AC. |
| Outline one difference between imperfect competition and monopoly? | Monopolist earns SNP in both the long run and short run. The imperfectly competitive firm earns SNP only in the short run and normal profit in the long run. |
| Outline advantages of monopoly as a market structure? | Economies of scale,Guaranteed supply of product/service,Secure employment,Reduced use of scarce resources,Potential for innovation/Research and development. |
| Outline disadvantages of monopoly as a market structure? | Exploitation of consumers,Inefficient use of scarce resources, The production of fewer goods at a higher price than perfect competition, Less efficient/innovative. |
| What regulates monopolies? | Competition Act 2002. |
| Define the deregulation of markets? | Is the removal of government controls from an industry or sector to allow for a free and efficient market place, e.g. The airline industry. |
| Outline reasons how can state companies who are often cited as being inefficient achieve greater productivity? | Deregulation, Appoint experienced entrepreneurs, Introduction of a profit motive and performance-related remuneration, Strategic alliances, Discontinue unprofitable services, Privatise the company, Appointments based on skills and knowledge |
| Define privatisation? | Is the sale of a state company to private owners |
| Define nationalisation? | Means taking a company or assets in the private sector into public ownership by a government. |
| List the headings under which perfect competition and monopoly are compared: | Efficiency, Price, Output, Profits,Demand Curve. |
Created by:
deborahh
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