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Chapter 15 HMWK

  1. How did your understanding of monopolies change after reading this chapter? What do you see differently now?
  2. Give an example of a regulated monopoly (a monopoly that exists due to government fiat).  Why did we choose to give this particular firm monopoly status?  Do you think it was a good decision?  Why or why not? Would you expect prices to rise or fall if we allowed other firms to enter the market? Why?  (Pricing is not always the reason we create a monopoly by government fiat.)



    3. I am beginning to understand that there is a downward-sloping market demand curve, and that marginal revenue is lower than price. So at a certain point, no more will be produced even if customers may want it.

    With the example of water providers, I can see how it would be inefficient for two separate companies to build two separate pipe systems. It would be an expensive and lengthy task, and they would be battling for a set number of customers. Prices may even rise as they both need to cover operating costs while providing smaller quantities.

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