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Pure monopoly

• A market structure in which the single seller has essentially no competition from
producers of close substitutes or from potential entrants. The difference from a
simple monopoly is not clear cut.

The Firm is the Industry and therefore faces a downward sloping demand curve, which is also the
average revenue curve. a. If the firm wants to sell more it must lower its price therefore marginal revenue
is also downward sloping, but has twice the slope of the demand curve.

The point where the marginal revenue curve intersects the quantity axis is of significance; this point is
where total revenue is maximized. Further, the point on the demand curve associated with where MR =
Quiz unit price elastic demand; to the left along the demand curve is the elastic range, and to the right is
the inelastic range.

Actual monopoly
A situation in which a single company owns all or nearly all of the market for a given
type of product or service. This would happen in the case that there is a barrier to entry
into the industry that allows the single company to operate without competition (for
example, vast economies of scale, barriers to entry, or governmental regulation). In such
an industry structure, the producer will often produce a volume that is less than the
amount which would maximize social welfare

Government-enforced monopoly
In economics, a government-granted monopoly (also called a "de jure monopoly") is a
form of coercive monopoly by which a government grants exclusive privilege to a private
individual or firm to be the sole provider of a good or service; potential competitors are
excluded from the market by law, regulation, or other mechanisms of government
enforcement. As a form of coercive monopoly, government-granted monopoly is
contrasted with a non-coercive monopoly or an efficiency monopoly, where there is no
competition but it is not forcibly excluded. Amongst forms of coercive monopoly it is
distinguished from government monopoly or state monopoly (in which government
agencies hold the legally-enforced monopoly rather than private individuals or firms) and
from government-sponsored cartels (in which the government forces several independent
producers to partially coordinate their decisions through a centralized organization).
Advocates for government-granted monopolies often claim that they ensure a degree of
public control over essential industries, without having those industries actually run by
the state. Opponents often criticize them as political favors to corporations. Government-
granted monopolies may be opposed by those who would prefer free markets as well as
by those who would prefer to replace private corporations with public ownership.

Short run
Term microeconomics very short run Definition: A production period of time in which
at all inputs in the production process are fixed, meaning the quantity of output itself is
fixed. Also termed market period, the very short run exists if the period is so short that no
additional production is possible. In other words, the good has been produced, all that
remains is to sell it. This is one of four production time periods used in the study of
microeconomics. The other three are short run, long run, and very long run.

Price Discrimination
A pricing strategy that charges customers different prices for the same product or service.
In pure price discrimination, the seller will charge each customer the maximum price that
he or she is willing to pay. In more common forms of price discrimination, the seller
places customers in groups based on certain attributes and charges each group a different


A market structure characterized by a large number of small firms, similar but not
identical products sold by all firms, relative freedom of entry into and exit out of the
industry, and extensive knowledge of prices and technology. This is one of four basic
market structures. The other three are perfect competition, monopoly, and oligopoly.
Monopolistic competition approximates most of the characteristics of perfect
competition, but falls short of reaching the ideal benchmark that IS perfect competition. It
is the best approximation of perfect competition that the real world offers.
Monopolistic competition is a market structure characterized by a large number of
relatively small firms. While the goods produced by the firms in the industry are similar,
slight differences often exist. As such, firms operating in monopolistic competition are
extremely competitive but each has a small degree of market control.

In effect, monopolistic competition is something of a hybrid between perfect competition

and monopoly. Comparable to perfect competition, monopolistic competition contains a
large number of extremely competitive firms. However, comparable to monopoly, each
firm has market control and faces a negatively-sloped

The real world is widely populated by monopolistic competition. Perhaps half of the
economy's total production comes from monopolistically competitive firms. The best
examples of monopolistic competition come from retail trade, including restaurants,
clothing stores, and convenience stores.

The four characteristics of monopolistic competition are: (1) large number of small firms,
(2) similar, but not identical products, (3) relatively good, but not perfect resource
mobility, and (4) extensive, but not perfect knowledge.

• Large Number of Small Firms: A monopolistically competitive industry contains

a large number of small firms, each of which is relatively small compared to the
overall size of the market. This ensures that all firms are relatively competitive
with very little market control over price or quantity. In particular, each firm has
hundreds or even thousands of potential competitors.

• Similar Products: Each firm in a monopolistically competitive market sells a

similar, but not absolutely identical, product. The goods sold by the firms are
close substitutes for one another, just not perfect substitutes. Most important, each
good satisfies the same basic want or need. The goods might have subtle but
actual physical differences or they might only be perceived different by the
buyers. Whatever the reason, buyers treat the goods as similar, but different.

• Relative Resource Mobility: Monopolistically competitive firms are relatively

free to enter and exit an industry. There might be a few restrictions, but not many.
These firms are not "perfectly" mobile as with perfect competition, but they are
largely unrestricted by government rules and regulations, start-up cost, or other
substantial barriers to entry.

• Extensive Knowledge: In monopolistic competition, buyers do not know

everything, but they have relatively complete information about alternative prices.
They also have relatively complete information about product differences, brand
names, etc. Each seller also has relatively complete information about production
techniques and the prices charged by their competitors.

Product Differentiation
The goods produced by firms operating in a monopolistically competitive market are
subject to product differentiation. The goods are essentially the same, but they have slight

Economic Freedom

The right to fairly compete economically is open to all in the business community;
freedom from wrongful interference with one’s business ad-vantage is a legally protected
right for all. For example, a person or organization that makes or markets a product or
service is legally protected from anyone spreading false rumors that disparage its
products or services. Committing business disparagement is similar to defaming an

Advertising and information

Advertising and information campaigns alongside the road are meant to catch the drivers'
attention, leaving them less room to concentrate on the traffic situation. Although
campaign boards alongside the road are meant to improve road safety they divert the
attention and lead to more crashes, just as advertising boards do.

However, not much is known about the relation between advertising and campaign
boards and road crashes. It is known, however, that advertising boards with moving parts
particularly attract attention, and boards at road level attract more attention than those
higher up. Studies indicate that it is better not to place advertising and campaign boards at
busy locations, and that it is better not to allow them to look li

A market in which a small number of suppliers or producers control the availability of
particular goods or services, and thus their market price. Because each firm produces
identical goods or services, and any charge in price or market share of one firm is going
to be reflected in others, decisions taken by one firm must consider the likely response of
the others. The private domestic airlines in India are an example of oligopoly.

Pure Competition
Purely competitive markets are used as the benchmark to evaluate market
Performance. It is generally believed that market structure influences the
Behavior and performance of agents with in the market. Structure influences
Conduct which, in turn affects performance

Perfect competition
In economic theory, perfect competition describes markets such that no participants are
large enough to have the market power to set the price of a homogeneous product.
Because the conditions for perfect competition are strict, there are few if any perfectly
competitive markets. Still, buyers and sellers in some auction-type markets, say for
commodities or some financial assets, may approximate the concept. Perfect competition
serves as a benchmark against which to measure real-life and imperfectly competitive