(a) Explain what is meant by monopoly and, using a diagram, explain why a monopoly may have lower average costs of production than a firm in perfect competition. [10]

·        Definition and examples of different types of monopoly.I.e. pure, natural, and local monopolies.High barriers to entry&exit / price-makers.·        Definition of perfect competition.Many buyers and sellers / homogenous goods / low barriers to entry&exit / price-takers.·        Average cost of a monopoly diagram:Draw and explain diagram.·        Average cost of a perfectly competitive firm diagram:Draw and explain diagram.·        Why monopoly has lower AC than perfectly competitive firm:High barriers to entry protect abnormal profits.Monopsony power.Economies of Scale.




Answered by Ethan S. Economics tutor

2527 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How does income affect the Demand curve?


Evaluate the case for government provision of goods and services such as flood defence schemes.


What two policies can the government employ to influence economic growth and inflation?


Evaluate policies the government can use to increase the rate of economic growth.


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences