Provide two circumstances where monopoly may offer efficiency advantages over competition.
What will be an ideal response?
The first is when production is characterized by economies of scale. One large firm can produce at lower average cost than could a number of smaller firms. Second, a monopoly payoff helps to spur innovation, whereas with competition, a producer could not recover the costs of research and development. More controversial advantages may be the rate of innovation, lower cost curves, and higher demand.
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In a Dutch auction, the starting bid is ________
A) far above any bidder's value for the good being auctioned B) far below any bidder's value for the good being auctioned C) far below the market price of the good D) equal to the market price of the good
U.S. GDP excludes underground activities
Indicate whether the statement is true or false
The present value of a payment to be made in the future falls as
a. the interest rate rises and the time until the payment is made increases. b. the interest rate rises and the time until the payment is made decreases. c. the interest rate falls and the time until the payment is made increases. d. the interest rate falls and the time until the payment is made decreases.
Theory B predicts that everything that happens, happens for a reason - although we may not know what the reason is. This theory
A) can be refuted. B) probably cannot be refuted. C) is a good explanation for what happens. D) is the kind of theory that scientists like to build because it can explain so much.