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Monopoly Market vs. Perfect Competition


Analyse why price can be lower in a monopoly market than in perfect competition.


Market Structures and Competition

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I. 🍃Introduction
- Definition of monopoly and perfect competition
- Importance of understanding the impact of monopolies on the economy

II. Lower average costs for monopolies
- Explanation of economies of scale
- Examples of monopolies that enjoy economies of scale
- Comparison to perfect competition

III. Subsidies for monopolies
- Explanation of state-owned enterprises
- How subsidies can lower average costs for monopolies
- Comparison to perfect competition

IV. Avoiding wasteful duplication
- Explanation of wasteful duplication
- Examples of monopolies that avoid wasteful duplication
- Comparison to perfect competition

V. Keeping prices low as a barrier to entry
- Explanation of barriers to entry
- How a monopoly can use low prices as a barrier to entry
- Comparison to perfect competition

VI. Price-making ability of monopolies
- Explanation of price-making ability
- Comparison to price-taking ability of perfectly competitive firms

VII. State monopolies and economic welfare
- Explanation of economic welfare
- How state monopolies may prioritize economic welfare over profit maximization
- Comparison to profit-maximizing monopolies and perfect competition

VIII. 👉Conclusion
- Recap of key points
- Implications for policymakers and consumers

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