Monopoly

Question 1

What is a monopoly

Answer 1

A single dominant source of supply (e.g. google)

Question 2

Types of monopoly

Answer 2

1. Pure monopoly – 100% market share
2. Legal monopoly – Any firm with 25% market share
3. Natural monopoly – Only makes sense to have one firm due to very high fixed costs
   (e.g. Severn Trent)

Question 3

Diagram

Answer 3

2nd October 2024
Mr ARd

Question 4

where does: Allocative efficiency, X efficiency, Revenue Maximisation, and Sales Maximisation occur

Answer 4

1. AE occurs at MC=AR
2. X efficiency occurs at anywhere on the AC curve
3. Revenue maximisation occurs where MR=0
4. Sales maximisation occurs where AC=AR