Monopoly and Microeconomics: Potato Chip Industry and Benefit to Stakeholders
Not what you're looking for?
In 2007, the potato chip industry in the Northwest was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competing in a monopolistically competitive market structure. In 2008, two smart lawyers quietly bought up all the firms and began operations as a monopoly called "Wonks." To operate efficiently, Wonks hired a management consulting firm, which estimated a different long-run competitive equilibrium.
Given that the new company is now run as a monopoly, how will this benefit the stakeholders involved, such as the government, businesses, and consumers?
Purchase this Solution
Solution Summary
This solution discusses the impact of a change from a monopolistic competition to a monopoly in 239 words with two references.
Solution Preview
With a change in structure from a monopolistic competition to a monopoly there will be a reduction in output of potato chips and an increase in prices.
The customers will suffer because they will have to pay a higher price for the same quality of potato chips or even inferior quality of potato chips. The customers will now have a lower choice of chips to choose from. There will be some consumers who will ...
Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.