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Understanding Monopolies: Causes, Pricing, and Market Structures

This chapter explores monopolies, their definition, causes, and pricing strategies. Learn about market structures and characteristics, such as perfect competition, monopolistic competition, and oligopoly. Discover the key sources of barriers to entry and the role of government regulation in curbing monopoly power.

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Understanding Monopolies: Causes, Pricing, and Market Structures

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  1. Monopolies Definition, Causes & Pricing Chapter 15

  2. 4 Market Structures Lowest Price Highest Quantity No DWL Highest Price Lowest Quantity DWL Perfect Competition Monopolistic Competition Monopoly Oligopoly Most competitive Least competitive

  3. Monopoly Market Characteristics • One Seller • Unique Product—no substitutes • Difficult/Impossible to enter or leave industry • Limited Information • Great deal of price control— Price Setters

  4. Barriers to Entry • The fundamental cause of monopoly isBarriers to Entry • 3 primary sources of Barriers to Entry: 1) Ownership of a key resource 2) Government gives one firm the exclusive right to produce 3) Costs of production make a single producer more efficient

  5. Qty Produce ATC Examples Utilities: Electricity, Gas & Water Natural Monopolies • natural monopoly-when a single firm can supply a good or service at a lower cost • Develop in industries with largeeconomies of scale

  6. Perfect Together? Government Regulation • Antitrust laws(1890) -a collection of statutes aimed at curbing monopoly power by: • Breaking up companies • Preventing mergers • Regulating pricing

  7. Current Events. Proposed Merger wanted to buy BenefitsCosts

  8. Anti-trust law video Monopoly Power in 2012? Apple

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