Market Structures. Monopoly Chapter 7 Section 2. Market Structures. Objectives: Describe characteristics and give examples of monopolies. Describe how monopolies are formed including government monopolies.
Chapter 7 Section 2
Economies of Scale – characteristics that cause a producer’s average cost to drop as production rises.
Companies without economies of scale – as output increases from zero, the average cost of each good drops, and the curve initially sloes downward. Eventually the average cost of production begins to rise as output increases because it has a rising cost per unit.
a. Some market power – have some control over prices.
b. Distinct customer groups – be able to divide groups into distinct groups based on their sensitivity to price.
c. Difficult resale – it does not work if people can resell the goods for a profit.
Usually, it will be for theme park admission, restaurants, etc.