Monopoly
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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.
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| 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.
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| What shape is a demand curve facing a monopolist? | Downward sloping from left to right.
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| What shape is the marginal revenue curve facing a monopolist? | Downward sloping but is declining faster than the demand curve.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| 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.
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| What regulates monopolies? | Competition Act 2002.
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| 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.
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| 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
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| Define privatisation? | Is the sale of a state company to private owners
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| Define nationalisation? | Means taking a company or assets in the private sector into public ownership by a government.
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| List the headings under which perfect competition and monopoly are compared: | Efficiency, Price, Output, Profits,Demand Curve.
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deborahh
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