Answered: effect of monopoly on market efficiency

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter15: Economic Regulation And Antitrust Policy

Section: Chapter Questions

Problem 5QFR

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Question

describe and illustrate what the market demand and the individual firm’s demand look like in a monopoly market.

describe the effect of monopoly on market efficiency, and be able to identify this effect on a graph.

Definition Definition Degree to which financial markets incorporate all available information into the prices of assets. In a more efficient market, the prices reflect the available information more than that in a weak efficient market. It is difficult for investors to outperform the market in a strong efficient market. This is because all the available information is already discounted in the asset's price. However, in a weak-form efficiency, the market does not reflect all information in the asset's price. As a result, it becomes easier to generate better returns in a weak form or an inefficient market.

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