Q) 2 Critically evaluate the merits/ benefits and problems of Perfect Competition and Monopoly , highlighting how each of the two market structures contributes to allocation of resources in an economy
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Q) 2
Critically evaluate the merits/ benefits and problems of
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- What is a monopoly and why does it differ from perfect competition? discuss an example of monopoly, its source of market power, and possible policy solutions to correct the negative consequences stemming from highly concentrated market power.Question 3:Show a Monopoly earning super normal profit and explain what are the costs of having monopoly in the economy. How can government prevent monopoly in the market?Please explain briefly in your own words why firms in perfect competitive markets are price takers while a monopoly firm is a pricemaker. Also comment on the size of the consumer and producersurplus in both market structures.
- Critically evaluate and explain each statement: With respect to resource allocation, the interests of the seller and of society coincide in a purely competitive market but conflict in a monopolized market.Note: This is an economics question. Based on the attached case: *What are the pros and cons of the creation of a medical marijuana monopoly? *What are the pros and cons of the legalization of medical marijuana by the Canadian government in terms of the price the users pay, the quantity of medical marijuana produced, and resource allocation efficiency during regulation and after its legalization?In the short run, each of the 5 firms in some industry faces a capacity constraint and constant marginal and average costs until this capacity is reached (see the table below). Marginal Cost = Average Cost Maximum output Firm 1 $50 100 Firm 2 $60 20 Firm 3 $67 50 Firm 4 $80 200 Firm 5 $92 70 Assuming that no firm has monopoly (pricing) power, what will be the quantity supplied at a price of (a) $40 (b) $55 (c) $73 (d) $99
- These two cases provide examples of markets that are characterized neither as perfect competition nor monopoly. Instead, these firms are competing in market structures that lie between the extremes of monopoly and perfect competition. How do they behave? Why do they exist?I would like to verify if my answer c is correct? Thank you! Figure 15-1 describes conditions in the monopolized weezil industry. If the government replaces the monopolist with perfectly competitive firms and forces these firms to take account of all the costs and benefits they impose on society, the industry will produce an output equal toa. W.b. X.c. Y.d. Z.1. How is a monopoly industry different from an industry with perfect competition? 2. What negative social outcomes may result from monopolies? (Please explain, and thank you! I appriciate you taking your time to answer my question)
- A natural monopoly is most likely to occur in which of the following industries? Group of answer choices a. the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years b. the diamond mining and marketing industry because one firm can control a key resource c. the software industry because of the importance of network externalities d. an industry where fixed costs are very large relative to variable costsWhen we compare monopoly to perfect competition in the long run,we expect the monopoly model to generate an outcome with Question 9 options: higher prices, break-even profits, and allocative efficiency higher prices, economic profits, and allocative efficiency lower prices, economic profits, and deadweight Joss higher prices, break-even profits, and deadwcight loss higher prices, economic profits, and deadweight lossExplain in detail the differences between Perfect competition and Monopoly. Using completely labelled diagrams compare the equilibrium of the firms (firm in perfect competition and firm in monopoly) enjoying economic profit in the short run.