Wonk Potato Chips

Principles of Microeconomics I January 29, 2012 last(a) Project The potato chip application in the northwest was running in competitive equilibrium in 2007. In 2008 ii lawyers quietly bought all of the firms and created a noncompetitive guild called Wonks. The ii lawyers then hired consulting firm to judge the different long term equilibrium. This paper will call off the benefits that a monopoly has over a monopolistic competitive bump along. A monopoly is a business that produces a product that in that respect be no close replacements and in which at that place ar strong obstacles for virgin firms to assent the market [ (Case, Fair, & Oster, 2009) ]. tater chips be a unique snack while there atomic number 18 replacements none are really the same. As for obstacles to bracing firms attempting to enter the market this would require a large cap investiture that would be very risky. Wonks could increase production and inflict outlays fashion ing it hard in not impossible for the new company to let a re hitch gibe to the market rate. When the two partners bought up all of the competing businesses they created a monopoly. By creating a monopoly the two partners are now in view of the industry. They now run through complete jibe of summate and the price that is set for their product.

The whole limits they face are the price that the market is willing or able to pay and their approach of production. When a company nookie operate as a monopoly there is no exit between the company and the industry [ (Case, Fair, & Oster, 2009) ]. When a c ompany gains control of an entire industry a! ll option are up to the companys discretion. The monopoly has complete control of supply, therefore it can control demand by distributing little of their product, this will in turn raise the price consumers are willing to pay for the product. This hurts consumers by decreasing the utility gained by each dollar spent. Final Project The government has policies in place to protect consumers from...If you want to get a proficient essay, order it on our website: OrderCustomPaper.com

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