Economics Unit 3 Gp

The Microsoft Monopoly TrialThe U .S . Justice department presented an Antitrust eggshell against Microsoft with the proclivity that the comp some(prenominal) had used its near monopoly position in the run constitution grocery store in to gain an unfair advantage in the web browser mart The Justice plane section had claimed that this deportment on the part of Microsoft is disadvantageous for consumers as well as solids in the package industry . But Microsoft had asserted that the bundle industry is quite competitive in whatever causa , and while Microsoft is a large organization , it did not ramble br unbeatable commercialize power by any means . The company had added that its software solutions are actually bear away merchandises for the consumers ( Microsoft . And this , of course , must be a take in to the prudence rather than a curseIn a consummate(a)ly competitive foodstuff there are many firms come forthing a overlap or function . A monopoly , on the contrary , is the provided firm in a particular market . The market value in the industry is determined by the come out and guide for the product or service in challenge . As the market provide drop-offs , the scathe of the product increases (Samuelson Nordhaus , 1998 A monopoly is in a precise good position to flow supply and thereby increase the hurt that it charges for the product or service it provides . And , since it has no competitors , there is no compulsion to decrease the price in to beat arguing (Samuelson NordhausHowever , the monopoliser faces a vent because now there are fewer buyers for its products or go , given that the price has increased So as to counter incubus the decrease in profits the monopolist would fix on a price that is higher than its marginal constitute . If the marg inal cost is represented by the supply wren! ch , the monopolist would decide to produce a sum that is little(prenominal) than the amount at the intersection of the demand and supply curves , that is , the quantity produced in a state of unadulterated competition (Samuelson Nordhaus match to economists , the cold weight down Loss of a monopoly must be borne by the entire economy seeing as the monopoly is charging a price higher than is charged by the intersection of the demand and supply curves in a state of perfect competition , and similarly producing a quantity that is lower than the quantity produced in a state of perfect competition . The following graph reveals this Dead pitch Loss (dwl where MSC is b battle arrayline tender exist in interaction with MSB or Marginal affectionate Benefit (Samuelson NordhausThe monopolist may decide to slide by increasing the price by reducing the quantity it supplies , and thereby increase the Dead Weight Loss to society (Samuelson Nordhaus . This is curious why the U . S .

Justice Department must substitute to put an end to monopolistic practices in favor of perfect competitionThe Justice Department had claimed that if Microsoft were to gain a monopoly in the browser market , the consumers would be facing a loss in terms of increased prices and reduced supply The Justice Department had also argued that if Microsoft were to become a monopoly innovation in the bushel market would be reduced . In other razz competitors must be allowed to equally produce innovative solutions in the industry . Besides , if Microsoft s creation were to become the dominant electronic nedeucerk browser the company itself would have less(prenominal) of an ! incentive to produce enhanced products in to beat competition ( Microsoft . As a matter of fact , quality enhancement is one of the trump characteristics of perfect competitionThe Internet browser market is said to be able to allow only one or dickens large companies due to the staggering costs involved (Krugman . The determine court and the appeals court agreed that when they considered the Microsoft eggshell , the company s market share of the operating system market was no less than eighty portion and could exceed ninety five pct (Mckenzie , 2004 . Thus , the government was correct in presenting an Antitrust case against the company . Control of Microsoft s near monopoly position may rattling well eliminate the possibility of a Dead Weight Loss to society caused by Microsoft s business ReferencesKrugman , Paul . zany Microeconomics . Available athttp /web .mit .edu /krugman /www /soft .html . Accessed 20 celestial latitude 2006Mckenzie , Richard B (2004 . Monopo ly : A Game Economists Love To flow - severely ! SouthernEconomic Journal Vol . 7 , Issue 4 , pp . 715Microsoft : Is The friendship also Big ? Available athttp /www .humboldt .edu ee3 /econ104 /s /monopoly . Accessed 20 declination 2006Samuelson , Paul A , and William D . Nordhaus (1998 . Economics . untried York : Irwin McGraw-Hill PAGEPAGE 5 ...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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