Microeconomics Essay Example | Topics and Well Written Essays - 1500 words - 1

Microeconomics - Essay Example 4. Features of monopoly Various features of monopoly are explained with the help of diagrams in this section. The question like how monopolistic firms attain the capability to increase the prices of their product and services is explained with the help of other economic terms. 5. Conclusion The major points discussed in this paper were summarised in this section. 6. Suggested areas of further research The question; how to protect the interests of the consumers in monopolistic market should be researched further. 7. References The references used for this research were cited in MLA style in this section. Abstract Monopoly is one of the major microeconomic terms which refer to the total domination of a firm in the market. The monopolistic firms face less competition in the market and they can control the market activities more effectively than other firms. Monopoly is beneficial to the firms whereas it is against the interest of the public. Monopolistic firms can increase the prices of their product and services far more than the actual prices because of lack of competition they may face in the market. Monopoly has different forms like natural, geographic, technological, and government. This paper briefly explains various features of monopoly according to the principles of microeconomics. ... Monopoly is a good market condition for an organization; but it is not so good for the consumers. The ability to fix prices of products and services is the main advantage of a monopolistic firm. For example, Microsoft is enjoying monopoly in the operating system market in the world at present. They are charging heavily for their Windows operating system because of the absence of any other competitive products. Types of monopoly Based on the nature, monopoly can be classified into different categories like; natural, geographic, technological, governmental etc. An industry is said to be a natural monopoly if it produce a desired output at a lower cost than two or more firms. Public utilities like railways, telecommunications, water services, electricity, and mail delivery etc are examples for natural monopoly. These public utility services are mainly controlled by the government and private competition is not allowed in these sectors. A natural monopoly and monopoly are entirely differ ent concepts since natural monopoly describes a firm's cost structure whereas a monopoly explains market share and market power. It is difficult for small firms to invest in areas with natural monopoly. For example, it is not easy for small firms to invest huge amounts needed for setting up a public transporting system like railways or public utility like water supply. Because of globalization, governments now permit private investments in natural monopolistic areas. In other words, the term natural monopoly is going to lose its significance since private companies may challenge the governments in these sectors. For example, BSNL (a public company) was the only telecommunication company in India till two decades before. At present many private companies like