Question

What do Economists mean when they use the terms monopoly?

What does the term monopoly usually mean to the general public?

What does the term monopoly mean when used in antitrust cases?

2.

ranklin Bank failed because it made a critical mistake in identifying its relevant cost of funds for making loans.

What did Franklin think its relevant cost of funds was? _________________________________

What should have Franklin used as its relevant cost?

Answer 1

• Economist think of a Monopoly, as a market structure where there is only one seller selling a unique product with no close subsitute. The seller has the whole market share and no competition and thus is the price setter in the market.
• According to a general public, they do not consider monopoly with much optimist action towards the society. As they have the complete hold of that good and have full power to regulate the market. And thus they will always sell less quantity than the optimal quantity for higher prices generating profits. But its only feasible if its governed by the governement regulating prices, risk, and high entry cost in the economy, working for the wellbeing.
• When a monopoly tries to ruin the opportunity of another company to enter the market and compete with them, antitrust law comes into action. The big concern is whether such action by monoploy is harming its consumers or benefitting its consumers. Few eaxmples be setting low prices and driving out competition or by colluding with other firms and gaining monopoly together.