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monopoly power

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An increase in elasticity of demand will increase monopoly power. This is absolutely correct. Does this mean that a monopolist will produce when demand is inelastic? Why?

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Characterize increases in elasticity of demand.

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An increase in elasticity of demand will increase monopoly power. This is absolutely correct. Does this mean that a monopolist will produce when demand is inelastic? Why?

ANSWER

In economics, a monopoly (from the Greek monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a kind of product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

Monopoly power is the degree of power held by the seller to set the price for a good.

In economics a company is said to have monopoly power if it faces a downward sloping demand curve (see ...

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