Consider the following firms Would you regard any of them as

Consider the following firms. Would you regard any of them as a monopoly? why or why not? Could you use the monopoly in analyzing the choices of any of them? Explain. a. the best restaurant in town b. your barber or beautician c. your local telephone company d. your campus bookstore e. Microsoft f. Amtrak g. the United States Postal Service

Solution

A monopoly firm is the single seller in the market and it has full price-setting power. Heavy barriers to entry exists in the market.

(a) The best restaurant in town is not a monopolist. There are numerous other competitors even if their rating is lower.

(b) Barber or beautician is not a monopolist. Many other substitutes are there offering same services.

(c) Local telephone company is a localized monopolist, if there are no other competitors who operate in same locality.

(d) Campus bookstore is not monopolist. There are many other bookstores available outside the campus, offering the same books.

(e) Microsoft is a monopolist. Its operating system Windows run on 90% of all computers sold worldwide and it can be said that Microsoft commands a too high market share and can be called a monopolist.

(f) Amtrak is a monopolist since it is the sole operator in US railroad services.

(g) US Postal Service is not a monopolist ecause many other private courier companies exist offering same services.