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Author Question: Critically evaluate the following statement. Since monopolies are by definition a one-firm industry ... (Read 189 times)

jenna1

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on: Jun 29, 2018
Critically evaluate the following statement. Since monopolies are by definition a one-firm industry they are able to charge the consumer the highest price possible.
 
  What will be an ideal response?

Question 2

What arguments suggest that an unequal wealth distribution is not a problem? What arguments suggest that an unequal wealth distribution is a problem?
 
  What will be an ideal response?


jonathanballen97

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Reply #1 on: Jun 29, 2018
Answer to Question 1

This is false. Even monopolies must abide by the law of demand. The goal of the monopolist like any other firm operating in any other industry is to maximize profit, not maximize the selling price. After all, if the price charged were high enough the firm would soon be serving very few customers if any.

Answer to Question 2

Those who believe that an unequal distribution of wealth is not a problem argue that it is a natural and inevitable consequence of risk taking in a market economy and it provides the incentive necessary to motivate entrepreneurs and investors. Those who believe that an unequal distribution of wealth is a problem argue that it can undermine democracy and lead to social conflict.


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