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Two different types of cost are important in microeconomics: marginal cost and fixed cost.The marginal cost is the cost to the company of serving one more customer. In an industry where a natural monopoly does not exist, the vast majority of industries, the marginal cost decreases with economies of scale, then increases as the company has growing pains (overworking its employees, bureaucracy ...
Often, a natural monopoly is the outcome of an initial rivalry between several competitors. An early market entrant that takes advantage of the cost structure and can expand rapidly can exclude smaller companies from entering and can drive or buy out other companies. A natural monopoly suffers from the same inefficiencies as any other monopoly.
A firm is a natural monopoly if it is able to serve the entire market demand at a lower cost than any combination of two or more smaller, more specialized firms. Or natural obstacles, such as the sole ownership of natural resources, De beers was a monopoly in the diamond industry for years. Monopsony, when there is only a single buyer in a ...
Each company spends substantial amount on advertisement. The publicity and advertisement costs are known as selling costs. The long-run characteristics of a monopolistically competitive market are almost the same as a perfectly competitive market. Two differences between the two are that monopolistic competition produces heterogeneous products ...
A natural monopoly occurs when a single company dominates the market by having the lowest prices or the products most in demand by consumers. Fixed costs and variable costs can both be factors. If the fixed costs associated with providing a service or product are very high, it may not make economic sense for new competitors to enter the market.
A state-owned enterprise is a commercial enterprise owned by a government entity in a capitalist market or mixed economy.Reasons for state ownership of commercial enterprises are that the enterprise in question is a natural monopoly or because the government is promoting economic development and industrialization.
The monopoly ensures a monopoly price exists when it establishes the quantity of the product. [1] As the sole supplier of the product within the market, its sales establish the entire industry's supply within the market, and the monopoly's production and sales decisions can establish a single price for the industry without any influence from ...
In U.S. publishing, five publishers known as the Big Five account for about two thirds of books published. [1] Each of the companies runs a series of specialized imprints , which cater to different market segments and often carry the name of formerly independent publishers.