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Characteristics of A Monopoly
Characteristics of A Monopoly
Advantages of a monopoly
Economies of Scale
Disadvantage of a monopoly
Higher prices – monopolist could set a very high price since they have no option but to but it
from the seller due to lack of competition in the market
Price discrimination
There are three conditions for the price discrimination:
o FIRST DEGREE
Alternatively known as perfect price discrimination, occurs when a firm
separates the market into each individual consumer and charges them the price
they are willing and able to pay.
o SECOND DEGREE
Charging a different price for different quantities, such as quantity discounts for
bulk purchases
o THIRD DEGREE
Charging different prices to different consumer groups. Meaning, price are
charged for different markets that break the market into few sub markets.