Monopoly Questions and Answers
QUESTIONS RELATED TO MONOPOLY: 1-What is the characteristic of the monopoly? 1 – The existence of a single product of the commodity 2 – characterized by prices, rising prices prevailing 3 – the relative stability of prices 4 – There are barriers to enter the industry monopolist 5 – not necessary to advertise Another Monopoly properties. Price control. In a monopoly, and at the expense of supply in the market one entity to control and demand, and the degree of the price offered and the control exercised by the institution or individual is greater.
Predatory pricing. This feature of the advantages of a monopoly consumers.
These are short term market gains when prices dropped to meet the demand of rare product. Suppliers and consumers directly benefit from an attempt to monopolize the company to increase the sale of business marketing. Price flexibility With regard to the demand for the product or service offered by the company monopoly or individual, and is dictated by the price elasticity of the ratio of the absolute value of the increase in prices and demand in the market. Lack of creativity At the expense of absolute control of the market, and monopolies display a tendency to lose efficiency over a period of time.
With one product lifetime, and innovative design and marketing techniques rear seat. Lack of competition. When the market was designed to serve the monopoly and the lack of commercial competition or the lack of goods and viable products shrinking the scope of “perfect competition. ” 2-How monopoly arises Monopoly arises in a variety of circumstances: there are types of goods and a service does not accept by its nature, or not in the public interest to multiple producers, it’s called natural monopolies, for example: to provide the city with water, electricity, or the trains running between two countries.
Often assume the state or municipal authorities to manage these services, or to grant a concession to a private company, subject to strict control. Monopoly may arise in an industry, the growth of a project, and it seized on other projects. Or as a result of grab or merge of small projects in the large-scale project, Monopoly May arise due to agreement between the projects owners in a particular industry to determine the price, or divide markets among themselves, known as (cartel), and in this case there are a number of producers, such agreement among them makes them a monopoly power.
Most of the countries have been working on the subject of monopolies control. 3-How we can regulate the monopoly Pricing at marginal cost Economists have for many decades argued the benefits of setting public utility tariffs on the basis of marginal cost. This view is expressed in many classic economic texts on regulation. Price discrimination One common objection to marginal-cost pricing is that, in the presence of economies of scale, a simple linear price equal to marginal cost would not llow the regulated firm to recover sufficient revenue to cover its total costs. Ramsey pricing In those cases where the regulator is unable to set the marginal price for each service equal to its marginal cost, economic theory still places central emphasis on reducing the deadweight loss. Incremental cost The deadweight-loss hypothesis has a hard time explaining why regulators fail to pursue policies which are efficient under the conventional economic theory, such as Ramsey pricing. Price / service stability
Another puzzle for the conventional economic approach to regulation is the heavy emphasis on price stability. There is a sizeable amount of evidence that price and service stability is one of the primary concerns of regulators. Alternative regulation • To encourage the productive efficiency of the monopolist. • To eliminate the incentive to waste resources seeking to obtain a position of monopoly. • To protect the sunk investment of the monopolist 4-Give some examples of monopoly type of monopolyThe main characteristicexamples
NaturalAccess to rare and not easily reproducible elements of productionMonopolies operating in the sphere of production is mineral deposits of strategic importance for the national economy technologicalFeature production: in this technology is not enough consumer demand to support many competitive firmsEnterprise for the production of specific goods, such as infrastructure for the operation of natural monopolies GeographicCompetition due to the non-rationality of the territorial limited due to the effect of geographic barriersPublic ransport companies infrastructureInfrastructure network – a network that supply products between distant from each other (both in space and in time), economic agentsBackbone enterprises in energy, rail transport , heat, gas and water supply patentUsing a unique patented technologyNatural monopolies are producing high-tech products, such as medicine StateMarkets related to the exclusive jurisdiction of the stateDefense, aeronautics administrative commandOperating in a command systemNatural monopolies in the administrative-command system