Explain the source of monopoly power for DeBeers’ Diamond Mine in South Africa, Microsoft (owned by Bill Gates), the American Medical Association (which licenses doctors), Polaroid’s Instant Picture Cameras, USAir (which owns virtually all the gates at the airport in Charlotte, North Carolina), and electric utilities.
What will be an ideal response?
DeBeers’ controls the scarce resource by controlling the distribution of the vast majority of the world’s diamonds. Microsoft has marketing superiority and perhaps a unique resource in Bill Gates, now a multibillionaire. The AMA restricts the supply of doctors through licensing (a legal restriction). Polaroid had an (expired) patent that allowed it to monopolize instant pictures. It successfully challenged Kodak’s attempt to enter the instant photography market. USAir is using a deliberately erected entry barrier; planes cannot fly into or out of an airport without a gate. Electric companies have economies of scale (as well as large sunk costs).
You might also like to view...
Resources are used to create goods and services.
Answer the following statement true (T) or false (F)
When the GDP is measured using "adjustments for price changes" it is known as the
A) real GNP. B) nominal GDP. C) real GDP. D) nominal GNP.
Based on the information in the above table, what is the labor force participation rate?
What will be an ideal response?
The currencies of Poland and Iceland (the zloty and the krona, respectively) declined in value relative to the euro following the financial crisis of 2008. This means that the
A) zloty and krona appreciated in value against the euro. B) euro depreciated in value against the zloty and the krona. C) zloty and krona depreciated in value against the euro. D) zloty depreciated in value against the krona. E) Both A and B are correct.