Monopoly Flashcards
1
Q
What is a monopoly?
A
It occurs when one firms dominates in a market
2
Q
Is a monopoly a price-maker or a price-taker?
A
Price-maker
3
Q
Is a monopoly upward or downward sloping?
A
Downward sloping demand curve
4
Q
When does profit maximise in a monopoly?
A
When marginal revenue = marginal cost
5
Q
What are the advantages of a monopoly?
A
It prevents wasteful duplication, will invest profits or pay out as dividends, offset another market failure and can achieve monopoly position through innovation
6
Q
What are the disadvantages of a monopoly?
A
Higher price than a competitive market with same cost and demand conditions, less output and lack of incentive
