Monopoly essay Essay Example for Free

Monopoly essay riseMonopoly is a firm that go off determine the market price of a good. In the extreme case, a monopoly is the only trafficker of a good or service. (Miller 103) Characteristics of a Monopoly. Are that there is one one seller in the market with no opposition and there ar many buyers in the market. The seller controls the prices of the goods or services and is the price maker as well. The consumers do not have perfect randomness on the goods or services. Advantages of a Monopoly.The Monopolies avoids duplications and hence wastage of resources. Enjoys economics of graduated table, due to it being the only supplier of the overlap or service in the market, makes many profits and be used for research and development to harbor their status as a monopoly. They also use price discrimination to benefit the weaker economic subdivision of society. To avoid competition, they tail afford to invest in the latest technology and machinery. Disadvantages of a Monopo ly.Monopolies have unfortunate levels of service, there is no consumer sovereignty, the consumers are charged high prices for such low quality goods, and lack of competition could lead to low quality goods, as well as out dated goods. What is required for a monopoly to earn profits in the long run? First off, any market type can see super normal profits in the short-run. What is more important is what happens in the long-run. Pure monopolies are not the only monopoly that can make profits.Natural Monopoly or a price discriminating monopoly can make profits as well. The only difference between them is why they are monopolies to begin with. Oligopolies are not monopolies, although they do tend to make above normal profits. Monopolistic competition does not give these types of profits in the long-run. Economic profit goes to zero here in the long-run because there is a lack of barriers here to prevent competition from entering (as there is with perfect competition).If a firm uses ec onomies of scale then I would be talking about a natural monopoly (or a few firms in oligopoly depending on how large or small the minimum efficient scale is). If the MES were small, economies of scale would not be an entry barrier to competition in order to achieve positive economic profits. If the MES were large, large adequacy to support one firm only, that would be the definition of a natural monopoly. In the long run, a monopolistically competitive firm adjusts plant size, or the quantity of capital, to maximize long-run profit.In addition, the entry and go away of firms into and out of a monopolistically competitive market eliminates economic profit and guarantees that each monopolistically competitive firm earns zipper more or less than a normal profit. (http//www. amosweb. com/cgi-bin/awb_nav. pl? s=wpdc=dspk=monopolistic+competition, +long run+ take+analysis).Works Cited Roger LeRoy Miller. Economics Today, Sixteenth Edition. Boston, MA Pearson Education, Inc. , publish ing as Addison-Wesley, 2012, 2011, 2010, 2008, 2006. http//www. amosweb. com/cgi-bin/awb_nav. pl? s=wpdc=dspk=monopolistic+competition,+long-run+ issue+analysis.