Ch+7.2

Ch 7.2 notes and questions

__Monopoly__ __Forming a monopoly__ __Government monopolies__ __Price discrimination__
 * monopoly forms when barriers prevent firms from entering a market that has a single supplier
 * the problem with monopolies is that they can take advantage of their market power and charge high price
 * economies of scale is when if a firm's start costs are high, and its average costs fall for each additional unit it produces
 * natural monopoly is a market that runs most effciently when one large firm provides all of the output
 * government monopoly is a monopoly created by the government
 * patent gives a company exclusive rights to sell a new good or service for a specific period of time
 * license is a government issued right to operate a business
 * franchise is a contract issued by a local authority that gives a single firm the right to sells its goods within an exclusive market
 * price discrimination division of customers into groups based on how much they will pay for a good
 * market power is the ability of a company to change prices and output like a monopolist

Questions #1-4
 * 1) a firm with market power can change prices and output of a company's products
 * 2) gov usually approve of natural monopolies because the market runs more smoothly when a large firms provides the output
 * 3) examples of price discrimination are a maximum price that a person will pay for a good such as universities, gyms memberships, cars
 * 4) economies of scale is when a product is at a high price, but for each time the company produces the product price goes to an average price