Question 1: Evaluate The Following Statement Using Economics

Question 1evaluate The Following Statement Using Economic Reasoning

question 1 Evaluate the following statement using economic reasoning: "A monopolist can charge whatever she wants because she is the only source available." question 2 Identify and describe a real world example of an oligopoly. What characteristics of this market fit the definition of an oligopoly? What role does advertising play in this market? Is this consistent with what you’ve learned about advertising and oligopoly in this course? a 100 words for both questions

Paper For Above instruction

Monopolists possess significant market power due to the absence of competition, allowing them to set prices above marginal costs. However, they cannot charge "whatever she wants" without losing profit opportunities because higher prices may reduce demand and invite regulation or substitute products. Economic reasoning suggests that while monopolists have pricing control, they are still constrained by demand elasticity and potential regulatory intervention. Therefore, the statement oversimplifies market power by implying unlimited pricing ability, which is inconsistent with economic principles of demand sensitivity and market constraints that limit monopolist pricing.

An example of an oligopoly is the airline industry, characterized by a few large firms dominating the market. These firms often have high barriers to entry, differentiated products, and interdependent decision-making. Advertising plays a crucial role in differentiating brands and maintaining market share, reflecting a strategic component of oligopolistic behavior. This aligns with course concepts, as advertising in oligopolies often aims at non-price competition and brand loyalty, reinforcing the market power of established firms while deterring new entrants.

References

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