Advantages And Disadvantages Of Monopoly

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Research Question:
1. What does Advantages and Disadvantages of Monopoly means?
2. What is the characteristic of Advantages and Disadvantages of Monopoly?
3. How does it affect the industry?
4. The industry have a monopoly in it’s field. It have a very few, but big competitors. How does it face the competitors?
5. What does the industry get from the monopoly?

1. Advantages and Disadvantages of Monopoly a company that holds a monopoly will have a full power to access their resources, invests its products development and research . They also dominate the area and expand their market to overseas.
Disadvantages of Monopoly: restrict product potential, can not increase the numbers of their
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Consumers may be charged high prices for low quality of goods and services. Lack of competition may lead to low quality and out dated goods and services.
How does the advantages and disadvantages of monopoly affect the industry?
In examining the economics of pure competition, it was shown that to each firm, demand is completely elastic. Therefore each firm can sell all that it wants at the market price, so each individual firm will maximize its own profits by increasing production until marginal cost equals price. However, because there is a lot of competition, by definition, inefficient firms are driven out and more efficient firms are attracted to the industry, so they produce their product for the minimum average total cost. Under pure competition:
Price = Marginal Cost = Minimum Average Total Cost (ATC)
Because product is produced for the minimum ATC possible, a competitive market achieves productive efficiency. Additionally, because the product is sold at the lowest possible price, competition also achieves allocative efficiency, since the lower price not only allows the greatest number of consumers to enjoy the product, but it also maximizes consumer
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In general, owners of businesses, including stockholders, tend to be wealthier than the buyers of a monopoly product, so this causes a transfer of income from poorer people to wealthier people, creating a greater inequity than would otherwise be the case. ii) The other great disadvantage of a monopoly is that it often does not seek to improve its products more than it has to, since there is no incentive to do so. In fact, there could be incentive not to do so. A good example of this is Microsoft. Because it has a monopoly in the office software suite and for operating systems, it makes only small improvements to each version of Microsoft Office and Windows so that people will continue to buy upgrades. Another good example of how a monopoly can reduce innovation is again considering Microsoft with its Internet Explorer browser. During the 1990s, Microsoft suppressed Netscape by offering its browser as part of the operating system, and it argued in court that they do not charge for it because it was part of the operating system. Although many people hated Internet Explorer 6 because it had many deficiencies, and didn't use industry standards for HTML, CSS, and JavaScript, Microsoft, nonetheless, would not spend a lot of money improving the product because
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