Learning Team Assignment

Learning Team Assignment
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Institution
Learning Team Assignment
During the week, we learnt different issues pertaining to a pure monopoly market structure. Among the issues discussed include the characteristics of a pure monopoly and how it sets its prices for profit maximization. Among the topics discussed, I found it interesting how a firm in a pure monopoly market controls its prices. Notably, a pure monopoly market structure is a market that has only a single firm which owns the rights to essential factors of production that makes such a market a unique one (McConnell, Brue, & Flynn,2009). Accordingly, since a firm in a pure monopoly controls the factors of production and lacks competition, such a firm is the price maker in the market and this makes it enjoy super-normal profits both in the short-run and long-run periods. With a down-sloping demand curve and a marginal-revenue curve lying below the demand curve, a pure monopoly operates in the elastic region of demand to increase the total revenue while reducing the total costs, which is responsible for profit maximization. For me, this was a simple concept to understand.
However, I had some difficulties understanding the issue of the barriers of entry into a pure monopoly market. Some of the primary factors preventing others firms from entering the market are the issue of economies of scale enjoyed by the dominant firm in the market, government regulation and the issue of patent rights to the ownership of essential factors of production (McConnell, Brue, & Flynn,2009). I could not understand how all these factors are applicable to all pure monopoly markets. A pure monopoly market created through government regulation, for instance, public school education, is the only one that makes sense in terms of barriers of entry to the market because private investors are legally prohibited to enter such a market. However, othe...