3.4.5 Monopoly Competition Flashcards
1
Q
What is legal monopoly?
A
One firms dominates 25% or more market share
2
Q
What is a dominant firm?
A
It’s one which account for a significant share of a given market and has a significantly larger market share its next largest rival
- market share of 40% +
3
Q
What is near pure monopoly?
A
Market share in excess of 90%
- can exists when one seller has more than 3/4 of a market defined in a certain way
4
Q
What are the key characteristics of a monopolistic market?
A
- firms have market power/ price - setting
- high barriers to entry/ exit
- EOS available to larger producers
- consumers may face a limited choice of supplier and pay high prices
5
Q
What is the benefits of monopoly for consumers?
A
- innovation
- lower prices : may be able to product lower AC than other firms competing - prices might be lower
6
Q
What is benefits of monopoly for workers?
A
- better job security: due to no competition, likely to have steady demand
- higher pay and/or perks for the workers
7
Q
Benefits for monopoly for government
A
- higher tax revenues: larger firms pay for corporation tax
- lower unemployment
8
Q
What are the Costs of a monopoly for consumers?
A
- less choice: large firms keep to the brands that make the most profits
- higher prices: due to them being price makers
- lower quality
- income inequality
9
Q
What is the costs of monopoly for workers?
A
- weaker bargaining power
- profits could be used to replace workers with machinery
10
Q
What are the costs of monopoly for governments?
A
- tax avoidance
- higher rate of inflation
