Term Paper #2
Instructions
For this term paper, you are required to pick a current economic topic that relates to the material we have covered or will cover in this course. You will research and find an article that covers the topic you have chosen. You can use an article online or offline from any reputable source. You will write up a review of the article and integrate course concepts into your review. Please make sure you both summarize the article and discuss how it relates to the course.
Conclusion
There are four types of markets: monopoly, oligopoly, monopolistic competition, and perfectly competitive. For the purposes of this lesson we focused on perfectly competitive and monopolistic markets. These represent the two extremes.
Perfect competition and monopolies both have benefits and costs. In a perfectly competitive market the price of a good is established by the market and will always be the quantity that guarantees a socially efficient quantity of goods. A monopoly will always produce the quantity that maximizes revenues, and this could lead to inefficiencies.
The advantages to free competition are that the price is decided by supply and demand, and therefore consumers will pay a fair price for goods. The disadvantage is that the competitive company does not benefit from economies of scale and therefore will always have marginal costs of production equal to marginal revenues over the long-run.
The advantages of a monopoly are economies of scale which makes production of a good less expensive the more that a monopolist produces. Another advantage to a monopoly is the possibility that in some cases a monopoly can supply the full demand of a market at a lower price than could several companies in the same market. The disadvantages of monopolies are that the monopolist can charge whatever price they want, produce as much or as little as they want, and can make it impossible for other companies to enter the market.
Sources
24/7 Wall Street. (2011). Monopolies of today: Companies with huge market shares. Retrieved December 3rd, 2015 from http://247wallst.com/investing/2011/03/22/the-new-generation-of-american-monopolies/3/
New Brunswick. (n.d.). Get your piece of the money pie. [Digital Image]. Government of New Brunswick Canada. Retrieved from
http://www2.gnb.ca/content/gnb/en/departments/esic/get_your_piece_ofthemoneypie.html
“Sirius XM Will Soar As It Dramatically Increases Prices.” (2013) Retrieved December 3rd, 2015 from
http://seekingalpha.com/article/1902691-sirius-xm-will-soar-as-it-dramatically-increases-prices
