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Monopoly Essay

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Below is an essay on "Monopoly" from Anti Essays, your source for research papers, essays, and term paper examples.

Perfect competition is a market structure in which firms within an industry are characterized by a large number of buyers and sellers. All buyers and sellers are engaged in the purchase and sale of a homogeneous commodity and they all have perfect knowledge of market prices and quantities. Under perfect competition there is no discrimination, and there is perfect mobility of resources. In a perfectly competitive market there are large numbers of buyers and sellers in the market. The good being sold is a homogenous (the same) product. All buyers and sellers have perfect knowledge of market prices and quantities. Free entry and exit from the market no barriers for entry. The firm is the price taker. No single buyer or seller is able to influence the price of the good. There is perfect mobility of resources.
A pure monopoly is a market structure in which a single producer controls the entire output of a certain commodity. In a pure monopoly, there is only one seller of a commodity for which there are no close substitutes. Indeed, there are substitutes for almost any commodity, but what gives monopolists command over particular products and what defines them monopolists, is their power to affect the price of their products by controlling the amount they sell. Barriers to entry of new firms and limited consumer choice. Abnormal profits in the long run. The key difference between a competitive firm and a monopoly is the monopoly’s ability to influence the price of its output. This is because a monopoly is the sole producer of the product that it sells. Hence, the demand curve facing the monopolist is the market or industry demand curve. This curve, which shows the total quantity that buyers will purchase at each price, also shows the quantity that the monopoly firm will be able to sell at each price. Thus, the monopoly firm, unlike the perfectly competitive firm, faces a negative sloped demand curve. This means that it faces a trade-off between the price it charges and...

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