Unit 5 Assignment Example | Topics and Well Written Essays - 500 words - 1

Unit 5 - Assignment ExampleA congenital monopoly is a monopoly that experiences economies of scale along its intact range of production. Alternatively, a natural monopoly is the type of monopoly that experiences a fall average total cost (ATC).In a monopolistic merchandise, marginal revenue is always slight than the expenditure of goods. This is because monopolies have a downward slopping demand curve. In fact, at any given price and quantity combinations, a monopolist is required to reduce the prices of his commodities in order to sell an additional unit. This explains why a monopoly is a special market situation. Consequently, monopolies do not exhaust all available market opportunities.Monopoly and immaculate competitive markets represents the two extreme in a market environment. In my own opinion, perfect competitive model is better than monopolies. This preference is based on economic aspects and market sustainability. In a perfect competitive market, ultimate expertness in the production and distribution of goods and services is achieved. Consequently, monopolies lack efficiency in their production and distribution of commodities. In a competitive market, producers and distributors of commodities are obliged to operate expeditiously in order to remain relevant (Bade & Michael, 2002). For example in a perfect competition, producers reduce prices of their commodities in order to increase their competitiveness. This in turn reflects on the production process where producers are forced to improve efficiency. On the other hand, monopolies have no immediate threats that would force them to reduce their prices or improve the timberland of their products. Thus, monopolistic market lacks efficiency. Lack of efficiency is mainly demonstrated through production and distribution of goods in spite of appearance a market. In an ideal case, a market is supposed to have a natural instrument that balances the distribution of commodities against the available cu stomers.Perfect competitive markets allow the mobility of