May 27, 2011
Wonks is a newfoundly developed society ran by two lawyers that bought up all the potato cut out firms in the Northwest. The potato chip industry was monopolistically competitive and at mavin time it is ran as a monopoly. This paper will explain the conformations between monopolistically competitive and a monopoly. It will likewise discuss the changes within the industry after switching to a monopoly and the benefits, if any, of the potato chip industry being ran as a monopoly.
A monopoly can be considered the opposite of perfect competition. It is a market form in which there is only unrivaled seller. The definition of a monopoly is an industry composed of only one firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry (Case, fairish & Oster, p. 254). By the lawyers buying up all the potato chip firms in the region they halt eliminated the competition. Wonks is not restrained by the government and will do everything possible to block entry of new companies into the industry to deal economic remuneration in the long run (Case, Fair & Oster, p. 254). This limits consumers choices in brands and pricing.
Smaller potato chip businesses would not be able to compete and will eventually be forced to shut down.
A monopolistic firm maximizes its profits by producing up to the point where fringy revenue equals marginal cost. As the monopolist, Wonks is the charge maker and can increase the arrive of sales by lowering the price, Wonks will not quest to lure consumers away from rivals; rather Wonks encourage them to buy more. Nevertheless, at any railroad siding level, the price charged by a monopolist is higher than the marginal revenue. As a result, a monopolist also does not produce to the point where price equals marginal cost
Wonks monopolistic market structure produces less output and can...If you want to get a full essay, order it on our website: Ordercustompaper.com
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