when a firm earns profits, other firms will enter its market
A narrow definition of monopoly is that a firm is a monopoly if it can ignore
The actions of all other firms
Which two factors make regulating mergers complicated
first it is not always clear what market firms are in. Second the newly merged firm mich be more effecient than the merging firms were individually
Some economists argue that Microsoft became a monopoly in the market for computer software by developing MS-DOS an operating system used for the first IBM personal computers. The more people who used MS-DOS based programs the greater the usefulness of using a computer with an MS-DOS operating system. The explantion for Microsoft monopoly is
When the government wants to give an exclusive right to one firm to produce a product, it
grants a patent or copyright to an individual or firm
gives a firm the exclusive right to a new product for 20 years from the date the product is invented
Ordinarily, governments attempt to promote competition in markets. Why do governments use patents to block entry into some markets when this prohibits competition?
Patents encourage firms to spend money on research necessary to create new products
The Nickel Co. of Canada is often cited as an example of monopoly. What was the source of the barrier to entry that gave this firm monopoly power?
Control of a key resource
Why are laws aimed at regulating monopolies called "antitrusts" laws
In the 1800's firms in several industries formed trusts; the firms were independent but gave effective control of the industry to a board of trustees. Antitrust laws were passed to regulate these trusts.
In the other contries soccer leagues are generally more competitive than American football and baseball legues due to
league membership being subject to annual promotion from or relegation to the lower leagues for some of the member teams
To be a natural monopoly a firm must
Have economies of scale that are so large that it can supply the entire market at a lower cost
A monopoly firm demand curve
is the same as the market demand curve
Firms that face downward sloping demand curves for their output in the product market are called
Assure a hypothetical case where an industry begins as perfectly competitive and then becomes a monopoly. Which of the following statements comparing the conditions in the industry under both market structures is true?
A monopoly will produce less and charge a higher price than would a perfectly competitive industry producing the same good
In evaluating the degree of economic efficiency in a market, we can state that the size of the deadweight loss in a market will be smaller
the smaller the difference between marginal cost and marginal price