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An Example Of A Government Created Monopoly

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Chapter 15 Homework An example of a government created monopoly is when the government grants patents to inventors. The benefits are that it increases incentives for creative activity. Natural monopoly is a type of monopoly that arises because a single firm can apply a good or service to an entire market at a smaller cost. When a market grows, it becomes large enough that two or more firms. At that point, it is no longer a natural monopoly. Monopolists must reduce the price on every unit it sells when it expands output by one unit. Marginal revenue for the monopolist declines as Q increases.

Movie tickets and financial aid for college tuition are examples of price discrimination. Monopolists choose to follow this business strategy

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