Question

Monopoly is the least competitive of the market structures. Patents are a major source contributing to the development of monopolies; explain why that might be a good thing. In general, what makes this market structure "bad" from a public policy perspective (the key is how price relates to marginal cost)? What does it mean to say that a monopolist is a "price maker" and explain the process a monopolist goes through to maximize profits.

Answer 1

ANSWER:-

• The monopolist is a price Market since it can set the cost of its products (goods) and services.
• The licenses and different boundaries to passage make the monopoly infrastructure the one of a kind seller of a specific good and services in the market and since no other seller can enter and circulate the goods, the interest curve in the market turns into the interest curve for the imposing business monopoly.
• The monopoly firm sets MC=MR profit maximization. As a sole seller, it doesn't create the productive amount at a lower cost like an perfectly competitive serious firm does by setting P=MC yet rather sets MC=MR which ensures greatest profit bu offering a lowe yield at a higher price.It would set the amount where Mc curve crosses the MR curve and next set the cost at the yield level where the interest curve relates to the output.It additionally practices cost separation as it can charge an alternate cost in two markets for similar sellers and administration which expands income.
• This is terrible from an open public point of view on the grounds that the amount created is neither allocative nor gainful proficiency which would prompt a deadweight misfortune in the market as some government assistance is lost by underproduction and overpriced goods.