FAQs
The answer is most likely c. neither productively nor allocatively efficient. This is because a monopoly naturally has no competition which means a high likelihood of the monopoly not producing goods as efficiently as possible.
What is a nondiscriminating pure monopolist? ›
A non-discriminating pure monopolist faces a demand curve which is the same as the market demand curve. The demand curve is downward sloping. The marginal revenue for such a firm is below the demand curve because for the firm to sell one more unit, it has to lower its selling price.
Why nondiscriminating pure monopoly must decrease the price on all units of a product to sell more units? ›
The non-discriminating monopolists generally tend to low down the products' prices. These prices are lowered so that maximum quantities of output could be sold. This scenario happens because the average revenue of the monopolist firm is generally higher if it is compared with the marginal revenues.
What is a pure monopoly quizlet? ›
Pure Monopoly. exists when a single firm is the sole producer of a product for which there are no close substitutes.
What is a non discriminating monopoly? ›
A non-discriminating monopolist is a person who aims at maximizing profit by charging the same price for all the customers. When there is inelastic demand, they will increase the price of the product to make a better profit. They will not produce beyond a certain output level.
Why pure monopoly does not exist? ›
A pure monopoly is a market structure where one company is the single source for a product and there are no close substitutes for the product available. Pure monopolies are relatively rare. In order for a provider to maintain a pure monopoly, there must be barriers preventing competitors from entering the market.
What is a pure monopoly known as? ›
A pure monopoly is a single seller in a market or sector and high barriers to entry, such as significant startup costs. There are no substitutes for the product sold by the seller. Microsoft Corporation was the first company to hold a pure monopoly position on personal computer operating systems.
What does a nondiscriminating pure monopolist find that it can sell? ›
Expert-Verified Answer
The marginal revenue of the fiftieth unit for a nondiscriminating pure monopolist that can sell the unit for $50 is also $50. This is because under monopolistic conditions, the marginal revenue is less than the price.
How does a pure monopolist see demand? ›
The demand curve facing a pure monopolist is downward sloping; that facing the purely competitive firm is horizontal, perfectly elastic. This is so for the pure competitor because the firm faces a multitude of competitors, all producing perfect substitutes.
What are the disadvantages of pure monopoly market? ›
What Are the Disadvantages Of A Monopoly?
- Increased prices. When a single firm serves as the price maker for an entire industry, prices typically rise. ...
- Inferior products. Monopolistic firms have minimal incentive to improve the quality of the goods and services they provide. ...
- Price discrimination.
A pure monopoly charges a single price, where a price discriminator will charge each consumer at different prices. This eliminates consumer surplus and turns that into revenue, which in turn increases the economic profits that are earned by the firm.
Does price discrimination exist only in pure monopolies? ›
By targeting each type of customer, the monopoly is able to earn a greater profit. Price discrimination is only achieved through the firm's monopoly status to control pricing and production without competition.
What is an example of a pure or perfect monopoly? ›
1. Public utilities: gas, electric, water, cable TV, and local telephone service companies, are often pure monopolies. 2. First Data Resources (Western Union), Wham-O (Frisbees), and the DeBeers diamond syndicate are examples of "near" monopolies.
Which is true for a pure monopoly? ›
Pure monopoly relates to a type of market structure with only one producer or seller of a good, and the good does not have any close substitutes. The market is also characterized by high entry barriers, which prevent any other competitor from entering the market.
What is a characteristic of a pure monopoly? ›
The fundamental features of pure monopoly are (1) a single firm selling all products in a market, (2) a unique product or offering, (3) constraints on entry and exit for other firms in the industry, (4) intelligent information regarding production processes that is inaccessible to those other in the industry.
What is a pure monopoly also known as? ›
A pure monopoly is a single seller in a market or sector and high barriers to entry, such as significant startup costs. There are no substitutes for the product sold by the seller. Microsoft Corporation was the first company to hold a pure monopoly position on personal computer operating systems.
Are pure monopolies rare? ›
Historically, pure monopolies are rare and often short lived because the reason for their existence (usually blocked entry) is somehow weakened. For example, patents expire, new resources are often discovered, and new technologies allow new competitors into the market.
Is a pure monopoly a natural monopoly? ›
On the other hand, pure monopoly has an advantage that the rest of the market (potential competitors) cannot meet. This is not natural efficiency but an artificially high barrier to entry such as a patent or being granted its status by the government. This is the main difference between the two forms.