Homework –EAV Chapter 9

<1>
a. revenue
b. hypothesize
c. chemical compounds
d. whereas
e. precisely
f. decline
g. retain
h. attitudes
i. investigation
j. parameters
k. valid
l. prior
m. dimensions
n. option
o. obvious
p. occupational
q. entities
r. regime
s. convention
t. image

<3>
1. g
2. k
3. m
4. e
5. i
6. f
7. b
8. a
9. c
10. n
11. d
12. l
13. o
14. j
15. h

<4b>
1. monitored
2. precisely
3. decline
4. monopoly
5. investigation
6. whereas
7. parameters
8. image
9. commitment
10. regime
11. challenge

<7b> #1
According to the definition of the Wikipedia, monopoly, in its economic aspect, means ‘a persistent situation where there is only one provider of a product or service in a particular market.’ This situation can be ‘characterized by a lack of economic competition for the good or service' and ‘a lack of viable substitute goods.' There could be several types of monopolies according to the characteristics of suppliers and products. De Beers, making a monopoly of diamonds market, is a good example of a natural resources monopolist. Monopolies granted legally from the government, which are called the ‘government-grant monopoly’ or the ‘government monopoly’, are mostly intended to control the products which are either the necessaries of life, or the significant sources of national revenue, or the nucleus of national industry. Public utilities, salt, ores such as gold and iron, the personal commodities like coffee and tea, and tobacco have been the main objects of government monopolies.

The monopoly has a main benefit in the regard that it enables consumers to expect the stable supply and price. For example, the Central Selling Organization manages the price of diamonds through monitoring the volume of supply. In case of government monopoly, consumers can expect the utilities such as electricity and gas to be supplied without breaks because of walkouts or slowdowns, which are more common conventions in private entities. The other positive effect is that it is possible for consumers to buy a product in a lower price through the Economies of Scale, in which an increase in the scale of the firm causes a decrease of average cost of each unit. And ‘dumping’ is also the element to cause the low cost.

On the contrary, the characteristics that the monopoly system has can bring negative effects to the consumers. As having the exclusive right to sell a product, the supplier can be arbitrary to the time and amount of supply, and even to the price of the product. If this is the case for the necessities, consumers not only have to endure this ‘predatory price’, but also challenge with the short of the requisites. In addition, consumers may have to buy a product of poor quality with unreasonable price. As there is no competitor within the same market, which is one of the obvious reasons that monopolies tend to become less efficient and innovative, those ‘complacent giants’ has no pressure to invest for the quality of products, consequently resulting in the consumers’ dissatisfaction.