Chapter 15

Chapter 15's main focus was on monopolies and how they affect the market/how their market affects society as a whole due to having strong market power in the business they are in. It discusses the different types of monopolies and how they each act in their own environments. They could be a monopoly due to the resources they have that allows them to have a lower input cost overall than other firms, are made based on the government's thinking of what is best for the public, and can be natural monopolies based on being able to produce at lower cost than other firms. They follow a downward sloping demand curve to make sure they have business, as while they may charge high prices for it, high enough prices would cause consumers to not buy the product/service. In this way, a monopoly is able to increase it's profit by a huge amount compared to a normal firm in a competitive market, as they are price makers, with the others being price takers. How they affect society depends on both the consumers' willingness to pay and whether what they're charging is reasonable. Along with this, price discrimination can also occur with monopolies, as they're able to lower prices below (or above) marginal cost to maximize profit due to the variety of consumers. In a competitive market, they wouldn't be able to do this as buyers would go elsewhere for their goods if price is higher than other firms, or the firm would be selling at a loss at a lower price.