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tarik64

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tT
发表于 2011-7-13 15:56 | 只看该作者
In Monopoly, say for example Electricity supply firm
Suppose the Market demand = 10kWatts
Price
If there is only 1 firm in the market = 10$
If there is only 2 firms in the market = 20$
If there is only 3 firms in the market = 30$
and so on

Why does the cost increase/multiply when the number of firms in the monopoly increase?

I know the LRAC curve is downward sloping curve and the demand curve is downward sloping...

I dont get the concept..!!!!!!!!!
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invic

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发表于 2011-7-13 15:56 | 只看该作者
This is a natural monopoly. There is is a lot fixed cost but very little variable costs. Say it takes a company 1 million just to start up but only 10 cents to produce a watt of electricity. If the total demand is limited, it wouldn't be enough to cover for multiple firms

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amqata

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发表于 2011-7-13 15:56 | 只看该作者
I think you may be making it more complicated than it needs to be. Consider a monopoly like being the male in a porno. Sure, there are a ton of other guys in the room who would wan't to bang the chick, but youre the only one who has the right/gets to do it.

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