4.2 - monopoly

Question 1

Pure monopoly

Answer 1

When a firm has the majority of the market share.
E.G google has 90% of searching

Question 2

Characteristics of a monopoly

Answer 2

Single seller in the market
High barriers to entry
Price discrimination

Question 3

Advantages of a monopoly

Answer 3

Possibility for research and development
Able to compete in a global market

Question 4

Disadvantages of a monopoly

Answer 4

Higher prices for consumers
Not allocatively efficient
Not productively efficient
Diseconomies of scale
Lack a choice / innovation

Question 5

Dynamic efficiency

Answer 5

Reducing cost curves by introducing new production processes

Question 6

Natural monopoly

Answer 6

When the most efficient number of firms in an industry is one

Question 7

Strengths of a natural monopoly

Answer 7

More cost efficient
Lower average costs

Question 8

Weaknesses of a natural monopoly

Answer 8

Lack of competition may decrease quality of service
High start-up costs