Lexicon Monopoly A monopoly is a market with only one seller and no close substitutes for the product or service that the seller is providing.
Hire Writer Allocative inefficiency occurs. The demand curve of monopoly is downward sloping and it is very steep. Because of a steep downward sloping demand curve, the demand curve is very inelastic. Hence, a monopoly could charge its product at a very high price.
It can do this easily by restrict its output and the price will shoot up. Because the demand curve is inelastic, a monopoly will not lose many customers when it raises its price.
For instance, Genting in Malaysia is a monopoly.
The fee that it charges for the casino and the theme park is actually very high. However, many people still go to Genting for trips because there are no substitutes for that. Besides that, a monopoly does not face any competition. As a result, it becomes productively inefficient. It will not have incentives to cut down the average cost.
Why should it do so? It is the one in the market. No matter how high it charges, it still has a lot of customers. Moreover, the quality of the products or services provided by monopoly may not be satisfactory.
For instance, Astro in Malaysia is the only cable channel for a long time. However, the service given by Astro is quite poor. When there is a rain, the image will be blurred and cannot be seen.
It still can be accepted if the rain is really heavy, yet sometime there is just a gentle rain. How can a consumer like us pays so much to Astro but getting such quality? In addition, Astro is smart and it tries to exploit the customers as much as it can. It has some packages and all the channels are bundled together.
Not all of the channels are going to be watched by us. It should let the customer has the choices to choose only the channels that he wants. If you want to watch cable channels, the only way is to tolerate with Astro which is a monopoly. Furthermore, a monopoly does not have incentive to innovate.
However, no one can guarantee that a monopoly will spend much money it earns in the research. It can just use it to pay the high salary of its employees and the management board.
For example, Microsoft used to be a very innovative corporate. Because of Microsoft, Windows and Office which benefit most of us come out.
Windows and Office have caused Microsoft to reach a monopoly status. However, after Microsoft becomes a monopoly, what can you see about its innovation?
Windows and office have a lot of versions. The Office also changes from years to years. Besides it changes the place of the features, is there really something benefits consumers compared to the old version?
Yet, Microsoft still can take these kinds of innovation as its new products and sell them to most of us. Monopoly seems to be very evil. Then should we ban monopoly totally?Sep 05, · Past antitrust cases provide clues about how lawmakers might proceed, but the tech giants pose some novel questions.
There has always been . Let us write or edit the essay on your topic "To what extent does market poses a threat to democracy" with a personal 20% discount. (“To what extent does market poses a threat to democracy Essay”, n.d.) To what extent do markets pose a threat to democracy. Monopolies are thus characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit.
A monopoly is a market with only one seller and no close substitutes for the product or service that the seller is providing. Technically, the term “monopoly” is used in reference to the market itself, although it is today commonly .
Monopolies can be national (royal mail), regional (water companies) or local (petrol station). Unlike a perfect competition situation were firms are 'price takers' and only respond to consumer demand, a monopoly finds itself in an imperfect competition market.
A monopoly is a business that is the only provider of a good or service, giving it a tremendous competitive advantage over any other company that tries to provide a similar product or service.
2. Not only can monopolies raise prices, but they also can supply inferior products. That's happened in.