Explore BrainMass

Monopoly and Demand Curve

Microsoft Corporation has monopoly power. It is a monopoly.

Respond to the above statement either agreeing or disagreeing. Your personal opinion is welcome, but use concepts, theory and empirical information presented in the reading and outside research to support your position.

If a firm believes that it is facing a "kinked" demand curve, what assumptions is it making about its rivals' reactions to its own price changes? How would the firm react to changes in its product costs?

Give some examples of a company or industry that might have a "kinked" demand curve. How do you think they should deal with it?

Solution Preview

1.) Microsoft is not a monopoly, though it certainly falls into a oligopoly form. The competition of Microsoft depends on the type of product one is looking at. Sun Systems has often been in competition with Microsoft for operational and other software. Corel/Wordperfect is another company that has competitive ties to Microsoft. Apple has danced around the Microsoft systems applications on occasion as well. Linux is a powerful and popular operating system, more popular in Europe and internationally than in the United States, but it also is proof that Microsoft is not a monopoly, though it does have some monopoly power. The power is seen in its leadership in ...

Solution Summary

Discussion answers to questions about the kinked demand curve of a company, and whether Microsoft is considered a monopoly. The second is an opinion with some support.