Comments on: Econ. Homework Please Help.? http://www.chinaitproducts.com/econ-homework-please-help/ China IT products,IT Industry News, reviews and reference! Tue, 06 Oct 2009 16:27:23 +0000 hourly 1 http://wordpress.org/?v=3.0 By: carlita_ http://www.chinaitproducts.com/econ-homework-please-help/comment-page-1/#comment-3842 carlita_ Fri, 02 Oct 2009 19:00:47 +0000 http://www.chinaitproducts.com/econ-homework-please-help/#comment-3842 4. Can a monopoly make an economic loss in the long-run? Yes. This loss can be the product of a change in consumer lifestyle choices or new technology taking over. For example, lets say that Bill Gates is the owner of the only water well in town and he is taking in all the profit. Recently a new study proves that water isn't very good for the body and that orange juice is not only healthier but also tastes better. So a possible outcome of this is that consumer will change their drinking habits and stop drinking water, causing losses to Bill Gates and giving profits to the Steve Jobs Orange Tree farm. 5. If a cartel like OPEC restricts the output of member nations to less than they are capable of producing with their existing levels of capital equipment, does the social cost of a monopoly increase? Explain. Yes. There will always be those who will continue to buy oil at a higher price and suffer loss but this simply results in a transfer since the OPEC receives the revenue and it is put out unto society. Meanwhile there are others who cannot afford the higher price and will move on to substitutes, creating a loss not offset by monopolistic gains. 4. Can a monopoly make an economic loss in the long-run?
Yes. This loss can be the product of a change in consumer lifestyle choices or new technology taking over. For example, lets say that Bill Gates is the owner of the only water well in town and he is taking in all the profit. Recently a new study proves that water isn’t very good for the body and that orange juice is not only healthier but also tastes better. So a possible outcome of this is that consumer will change their drinking habits and stop drinking water, causing losses to Bill Gates and giving profits to the Steve Jobs Orange Tree farm.
5. If a cartel like OPEC restricts the output of member nations to less than they are capable of producing with their existing levels of capital equipment, does the social cost of a monopoly increase? Explain.
Yes. There will always be those who will continue to buy oil at a higher price and suffer loss but this simply results in a transfer since the OPEC receives the revenue and it is put out unto society. Meanwhile there are others who cannot afford the higher price and will move on to substitutes, creating a loss not offset by monopolistic gains.

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