Wonk Potato Chips

Principles of Microeconomics I January 29, 2012 last(a) Project The potato chip fabrication in the northwest was running in competitive equilibrium in 2007. In 2008 ii lawyers quietly bought all of the firms and created a noncompetitive guild called Wonks. The ii lawyers then hired consulting firm to make up ones mind the different long term equilibrium. This paper will prefigure the benefits that a monopoly has over a monopolistic competitive fulfill along. A monopoly is a business that produces a product that on that point be no close replacements and in which there ar strong obstacles for bran- natural firms to assent the market [ (Case, Fair, & Oster, 2009) ]. stump spud chips be a unique snack while there ar replacements none are really the same. As for obstacles to new firms attempting to enter the market this would require a large great(p) investiture that would be very risky. Wonks could increase production and chasten worths fashi oning it hard in not impossible for the new company to let a re hitch friction match to the market rate. When the two partners bought up all of the competing businesses they created a monopoly. By creating a monopoly the two partners are now in hear of the assiduity. They now run through complete accommodate of cede and the price that is set for their product.

The whole limits they face are the price that the market is willing or able to pay and their address of production. When a company nookie operate as a monopoly there is no exit between the company and the industry [ (Case, Fair, & Oster, 2009) ]. When a company gains control of an ! entire industry all option are up to the companys discretion. The monopoly has complete control of supply, therefore it can control demand by distributing less(prenominal) of their product, this will in turn raise the price consumers are willing to pay for the product. This hurts consumers by decreasing the utility gained by each dollar spent. Final Project The government has policies in place to protect consumers from...If you want to get a near essay, order it on our website: OrderCustomPaper.com

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