Question

What was the effect of the italian monopoly?
-Apex

Answer 1

Any other choices?

Answer 2

No :| Its to fill out a packet its not multiple choice @Kfins99

Answer 3

Oh, is it like a short answer? Or...?

Answer 4

yes hun its just to write atleast a sentence, its an Apex Study Sheet :) @Kfins99

Answer 5

Oh! Sorry for misunderstanding that! "In monopoly:
P exceeds MC
P exceeds lowest ATC
an effeciency loss (dead weight loss) occurs (sum of consumer surplus + producer surplus is less than maximum)

Income transfer:
transfers income from consumers to stockholders who own monopoly
monopoly charges a higher price than a PC firm with the same costs
Can be seen as a "private tax" on consumers since the higher price generates higher economic profit that is distributed amongst shareholders of the company, who are mostly from high-income groups
owners benefit at the expense of the consumers
Since owners have more income than the consumers, monopoly increases gap between rich and poor
exception: when buyers are richer than owners of the monopoly, then income transfer from consumers to owners may decrease income inequality (usually not the case)

Cost Complications:
- A purely monopolistic industry will charge a higher price, produce a smaller output and allocate economic resoures less efficiently than a purely competitive industry assuming they have equal costs. This is because of the entry barriers that characterize monopoly.

- However, costs may not be the same for purely competitive producers and monopolistic producers: the unit cost that a monopolist has is either larger or smaller than a purely competitive firm's.

If the monopoly is achieved and sustained through anticompetitive actions, creates substantial economic inefficiency, and appears to be long-lasting, the government can file charges against the monopoly under the anti-trust laws. If found guilty of monopoly abuse, the firm can either be prohibited from engaging in certain business or be broken into two or more competing firms."

Answer 6

Thank you sweetie! @Kfins99

Answer 7

No problem!