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
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
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
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