Monopoly Essay

1397 Words6 Pages
University of Bahrain College of Business Administration Department of Economics & Finance Name | I.D | Section No. | Hawraa Mulla Ahmed Hassan | 20093565 | 8 | Latifa | | 3 | Marwa Ibrahim Fazai | 20092792 | 8 | Wafa Monammed Ali | 20091374 | 8 | Zainab Yousif Almadhi | 20093125 | 8 | Introduction: Usually, when we hear the word monopoly, the first thing that comes in our mind is a firm that is dominating the market of a certain good with the absence of competitors and charging the price without having any competition with others. So, is this true or false? This is what we are going to explain by presenting the main differences between the perfectly competitive market and monopoly market and how these differences affect the market power for both. And the point we are going to emphasize is how the monopolist sets their prices. Monopoly Market Vs. Perfectly competitive Firms: Economists assume that there are a number of different buyers and sellers in the market place. We have competitors in perfectly competitive market and monopolists in monopoly market. So what's the difference between the perfectly competitive firms and monopoly market? * Perfectly Competitive Market: Is a Market that is allows price to change in response to changes in supply and demand, because there is many supplier and many substitutes for almost every product. So, if one product becomes too expensive, a buyer can choose a cheaper substitute instead, as a result any firm that increases its prices will lose market share and profits. For Example, Pepsi and Coke, if the supplier of Pepsi increases its prices, consumers will switch to Coke market. * Monopoly Market: Is a market structure in which there is only one producer/seller for a product and entry into such a market is restricted due to high costs. If a company wants to control a market it can create

More about Monopoly Essay

Open Document