Monopoly Market

Monopoly Market

1. Is Microsoft a monopoly? Is the electric power industry in California an oligopoly? Explain your reasoning for each.

A monopoly market or a monopoly firm is one in which there exist only one firm in the industry, this firm dominates the market and the firm is a price marker whereby it determines the price of the products it produces, Microsoft is not a monopoly because in the computer industry there exist other firms in the industry, however the firms market share is 90%. Therefore Microsoft cannot be termed as a monopoly since there it is not the only firm in the computer industry.

The electricity power industry in California is an oligopoly, an oligopoly market structure is a situation where by there exist two firms in the market, this firms are the only firms that produce certain products in the market, the California energy industry has two firms that compete with each other, these two firms follow the game theory that states that when one firm increases the price of its products the other firm will not follow, however if one firm decreases its prices the other firm will definitely reduce its prices.

Monopoly Market

2. Since the September 11th attack there has been an increase in the demand for security personnel: police, air marshals, airport security, etc. How do you think the higher demand has affected the equilibrium wage? In which direction do you think the labor supply and demand shifted? Explain your reasoning.

Since the September 11th attack the increased demand for security personnel and security officers have affected the equilibrium wage rate, when the demand for labor increases then definitely the wage rate must increase, this is according to the law of demand. When there is an increase in labor demand then the demand will exceed the supply and when this happens then this happens then definitely there will be an increase in the wage rate.

References:

Philip Hardwick (2004) Introduction to Modern Economics, Pearson Press, New York

This nation.com (2007) is Microsoft a monopoly, retrieved on 20th September, available at http:

//www.thisnation.com/question/027.html