Monopolistic markets

Question 1

Markets are Monopolistic depending on the context:

Answer 1

• Degree of changing contestability in the market
• Objectives of the business over time
• Impact of regulation / state v private ownership
• Judge monopoly on a case by case basis- outcomes not theory
• Even a natural monopoly can be partially contestable

Question 2

monopoly diagram with price cap

Answer 2

• Draw supernormal profit
• Price cap at sales max