Monday, November 9, 2015

This chapter was very different than chapter 14. Instead of perfectly competitive markets, this chapter dealt with monopolies. The big difference between the two is that monopolies are able to set and control their prices because they are the only ones who make that product, therefore people cannot simply choose to buy from another firm because there is only one.  This is different than in chapter 14 in which there were only price takers.  The perfectly competitive firms could not control their price by themselves, once the price was set by the market, they had no say in changing the price, and if they did, buyers would simply go to another firm selling the exact same product for a different price.  But in chapter 15 we learn about monopolies, and monopolistic power.  In these cases, firms are very special, they are the only ones who produce a certain product, therefore they can charge whatever they want for it.  Buyers cannot simply move to another firm, because there are no other firms.  Monopolies have a lot of power, therefore government officials try to step in to counter this great influence.  They make sure they cannot raise prices to high, or make things to difficult to buy that certain product.  

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