Lecture 5 - Monopoly Flashcards
1
Q
What are some barriers to entry?
A
1) Economies of scale
2) Network economies - Product of service is used by everyone in the market e.g Microsoft
3) Economies of scope - When firms experience a lower average production cost due to producing a range of products
4) Product differentiation and brand loyalty
2
Q
On the graph where are max profits seen?
A
When MR=MC
3
Q
Where is the supernormal profit area?
A
The shaded area on the graph
