Economics Assignment

Economics Assignment

Introduction

This paper will be discussing a question that is "No firm is completely sheltered from rivals; all firms compete for consumer dollars. If that is so, then pure monopoly does not exist. Do you agree?" Paper will discuss the monopoly markets and will state an argument for the above question. I don't agree to the above question as every industry has its own characteristics. Based upon its characteristics the market is defined either pure monopoly or perfect competition etc. There are many types of markets. It is true all the companies have to face a competition but this happens in the case where there are substitute products available.

Discussion

For there to be a monopoly, it is necessary in this market there are no substitutes, ie there is no other good that can replace the particular product and, therefore, is the only alternative that has the consumer to buy. Also often defined as "market in which there is only one seller," but this definition corresponds more with the concept of pure monopoly (Baumol & Willig, 1982). The monopolist controls the amount of production and price, although not simultaneously, since the choice of production or the price determined by the position is relative to the other, ie, the monopoly could first determine the rate of profit-maximizing output and then to determine, using the demand curve, the maximum price that can be charged to sell this production.

From an economic standpoint, if the monopoly is maximizing profit, unlike what happens in Perfect Competition , faces a demand curve slopes downward, so not being horizontally never operate on a voluntary basis where the marginal revenue (MR) is less than zero, even if production costs were equal to zero, since there is always the alternative to reduce production, thereby increasing the income and thus the ...