Thus monopoly means single seller. The four key of characteristics of monopoly are Single supplier, unique product, Barriers to Entry and Exit, and Specialized Information.
Answer of question 1
1.1 What is monopoly?
Monopoly is a market with only one seller and no close substitutes for that seller’s product. Monopolies arise because of barriers to entry that inhibits other companies from entering the market and exerting competitive pressure on the monopolist..
.1.2 Characteristics of monopoly
The four key of characteristics of monopoly are Single supplier, unique product, Barriers to Entry and Exit, and Specialized Information.
1.2.1 Single Supplier
The substance of monopoly is a market controlled by a single seller. The most important aspect of being a single seller is that the monopoly seller is the market. The market demand for a good is the demand for the output produced by the monopoly.
1.2.2 Unique Product
A monopoly become a single-seller status is because the product is unique and can’t find the close substitute and there are no close substitutes available for.
1.2.3 Barriers to Entry and Exit
In a monopoly market there is strong barrier on the entry of new firms. Monopolist doesn’t have competition. As there is one firm no other rival producers can enter the market of the same product.
1.2.4 Specialized Information
The company preserves whole control over the market by using special information. This information may give the company the benefit of special production techniques. The specialized information may come from the form of legal tips regarding trademarks, copyrights and patents.
1.4 Conclusion of question 1
In the conclusion, monopolies have advantages and disadvantages.
2.0 Introduction of question 2
There are four types of market structures, which are perfect competition, monopolistic competition, oligopoly and monopoly.
Answer of question 2
2.1 Perfect competition
Perfect competition has large numbers of both buyers and sellers. The goods produced by all sellers are identical, and there exist no legal, social or technological barriers to entering or leaving the industry. Example for the investment industry, finance industry.
2.2 Features/characteristics of perfect competition
The four key characteristics of perfect competition are large number of small firms, identical goods, perfect resource mobility and perfect knowledge.
2.2.1 Large Number of Small Firms
A perfectly competitive market or industry contains a large number of small firms, each of which is relatively small compared to the overall size of the market.
2.2.4 Perfect Knowledge
In perfect competition, buyers are completely aware of sellers’ prices, such that one firm cannot sell its good at a higher price than other firms. Each seller also has complete information about the prices charged by other sellers so they do not inadvertently charge less than the going market price.
2.3 Monopolistic competition
Monopolistic competition is the market with many sellers, but fewer than in the perfect competition. The classic example is restaurant industry, like pizza hut, domino pizza.
2.4 Features /characteristics of monopolistic competition
The four key characteristics of monopolistic competition are large number of small firms, product differentiations, resource mobility and Extensive Knowledge.
2.4.1 Large Number of Small Firms
A monopolistic competition industry contains a large number of small firms, each of which is relatively small compared to the overall size of the market.
2.4.2 Product differentiation
Product differentiation is responsible for giving each monopolistically competitive a little bit of a monopoly, and hence a negatively-sloped demand curve..
2.5 Oligopoly
Oligopoly consists of only a few sellers that may be producing either standardized or differentiated goods, with a focus on product and brand differentiation as in the monopolistic competition. Example for computer industry, mobile phone industry.
2.6 Features/characteristics of oligopoly
The three most important characteristics of oligopoly are small number of large firms, economies of scale and barriers to Entry
2.6.1 Small Number of Large Firms
Oligopoly is an industry dominated by a small number of large firms, each of which is relatively large compared to the overall size of the market.
2.7 Monopoly
Thus monopoly means single seller. Monopoly is a firm of market organization for a commodity in which there is only one single seller of the commodity. Example Tenaga Nasional sdn.bhd.
2.8 Features/characteristics of monopoly
The four key of characteristics of monopoly are Single supplier, unique product, Barriers to Entry and Exit, and Specialized Information.
2.8.1 Single supplier
Monopoly is a form of imperfect market structure where there is only one seller of a product. The characteristic feature of single seller eliminates the distinction between the firm and the industry. A monopolist firm is itself ‘the industry.
2.8.2 Unique product
A monopoly become a single-seller status is because the product is unique and can’t find the close substitute and there are no close substitutes available for.
2.8.3 Barriers to Entry and Exit
In a monopoly market there is strong barrier on the entry of new firms. Monopolist doesn’t have competition. As there is one firm no other rival producers can enter the market of the same product.
2.8.4 Specialized Information
The company preserves whole control over the market by using special information. This information may give the company the benefit of special production techniques.
2.9 Conclusion of question 2
In the market, there have 4 types of model which are perfect competition, monopolistic competition, oligopoly and monopoly.
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