Th3.4: Extra Monopoly Info Flashcards

1
Q

Why are there a few permanent monopolies?

A

since supernormal profits give an incentive for other firms to break down the monopoly through a process of creative destruction

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2
Q

Why do some suggest a monopoly, or the possibility of having a monopoly, is good in the short run?

A

as it provides incentive to invest and innovate which is good for both the company and the economy

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3
Q

Why are the bad aspects of monopoly more likely to become true in the long run?

A

as firms can simply enjoy the benefits and become complacent

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4
Q

What will the effects of a monopoly depend on?

A

the industry - in industries with high fixed costs, the gains from economies of scale will be higher

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