Question

1-Create a Venn diagram, where you compare and contrast at least 3 characteristics of oligopolies and monopolies.

2- Explain two benefits that could arise with the existence of specialized brands.

3- If a group of sellers can form a poster, what quantity and price would you be trying to establish?

4- why are antitrust laws so controversial?

Answer 1

1)

2)

The benefits that could arise with the existence of specialized brands could be:-

1) Easy recall of the Brand -Customers in the market will find it easy to remember your company and its products and brands, which leads to brand recognition and loyalty.
2) An edge over the competitive products - Specialized brands gets competitive edge in the market by branding its products as a unique product in order to differentiate it in the marketplace.

3) If group of sellers form a cartel the market will be treated as a monopoly and the firms forming the cartel will agree on the monopoly outcome, which will maximize the profit of each firm in the cartel. The firms will set the quantity demanded where the marginal revenue is equal to marginal cost and fix the price equivalent to that point in the demand curve.

4)

Anti trust laws are controversial because of the illegality of some business practices that are not valid

For example - Predatory pricing which means setting the prices so low that force the other firms to go out from business, and then resort to setting monopoly prices. This practice has been identified as is illegal in antitrust law.
However as per the belief of few economists, predatory pricing is considered as a good business strategy. But in order to get thus strategy working, prices should be set below cost, which can hurt the  predator could more by this than the prey.