Category: Uncategorized
-
Monopoly and Efficiency
The fact that price in monopoly exceeds marginal cost suggests that the monopoly solution violates the basic condition for economic efficiency, that the price system must confront decision makers with all of the costs and all of the benefits of their choices. Efficiency requires that consumers confront prices that equal marginal costs. Because a monopoly…
-
The Inefficiency of Monopoly
Most people criticize monopolies because they charge too high a price, but what economists object to is that monopolies do not supply enough output to be allocatively efficient. To understand why a monopoly is inefficient, it is useful to compare it with the benchmark model of perfect competition. Allocative efficiency is a social concept. It refers…
-
Illustrating monopoly profits
Illustrating Monopoly Profits It is straightforward to calculate profits of given numbers for total revenue and total cost. However, the size of monopoly profits can also be illustrated graphically with Figure 9.6, which takes the marginal cost and marginal revenue curves from the previous exhibit and adds an average cost curve and the monopolist’s perceived…
-
How Monopolies Form: Barriers to Entry
Because of the lack of competition, monopolies tend to earn significant economic profits. These profits should attract vigorous competition as described in Perfect Competition, and yet, because of one particular characteristic of monopoly, they do not. Barriers to entry are the legal, technological, or market forces that discourage or prevent potential competitors from entering a market. Barriers…
-
Why analyze a firm’s profit maximizing strategies under conditions of a monopoly?
Monoplane by Robert Payne, CC-BY. If perfect competition is at one end of the competitive spectrum, at the other end is monopoly. Mono means one. A monoplane is an aircraft with one wing. A monocle is a single eyeglass. Monopoly is a single supplier, the only firm in an industry. Monopolies have monopoly power, which is…
-
Entry and Exit Decisions in the Long Run
The line between the short run and the long run cannot be defined precisely with a stopwatch, or even with a calendar. It varies according to the specific business. The distinction between the short run and the long run is therefore more technical: in the short run, firms cannot change the usage of fixed inputs,…
-
How to Write an Outstanding Resume If I’m a College Graduate
Recent college graduates entering the workforce tend to hit a wall when it comes to writing their resume. What should I include? How to write a resume if I have no work experience? The good news is that, with few exceptions, the rest of your peers are all in the same boat: no experience, but…
-
How To Fight Writer’s Block and Win
Writer’s block is an affliction that affects almost all writers at some point. I say “almost all” because I have to allow for some cyborgs from outer space posing as writers who never have writer’s block. For us humanoid writers, it just so happens that sometimes the words don’t flow. The ideas don’t come, panic…
-
STAGES OF ROSTOW’S MODEL OF ECONOMIC GROWTH
————————————————————– The most influential and outspoken advocate of the stages-of-growth model was the American economist, professor, and political theorist Walt Whitman Rostow. According to Rostow, the transition from underdevelopment to development can be described in terms of a series of steps or stages through which all countries must proceed. According to the theory of economic…