_breaking up the monopoly _– The firm can be forced to sell off parts of the business to create competing firms, leading to lower prices and profits. There is a number of measures a government can take to correct these problems:
This results in a deadweight welfare loss. There is a transfer of consumer surplus to producer surplus.The consumer is therefore exploited and the firm is productively inefficient.Ī monopolist is also allocatively inefficient, because price is above marginal cost (MC). By restricting output the monopolist earns permanent abnormal profit. This section deals with how governments can intervene in product markets to ensure markets are efficient and that consumers, employees and suppliers are not exploited by powerful companies.Ī profit maximising monopoly will produce at an output that is below the level where average total cost (ATC) is at a minimum. Government Intervention Control of Monopolies Conflicts and Trade-Offs Between Objectives and Policies.Equilibrium Levels of Real National Output.The Benefits and Costs of Economic Growth.The Characteristics of Aggregate Demand.The UK Economy - Performance and Policies.Positive and Normative Economic Statements.Alternative Views of Consumer Behaviour.
#Government monopoly economics definition free#
Free Market Economies, Mixed Economy and Command Economy.Price, Income & Cross Elasticities of Demand.Specialisation and the Division of Labour.Introduction to Markets and Market Failure.Wage Determination in Competitive and Non-competitive Markets.
Business Behaviour and the Labour Market.Factors Influencing Growth and Development.Macroeconomic Policies in a Global Context.Trading Blocs and the World Trade Organisation (WTO).Strategies Influencing Growth and Development.
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