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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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