Question

Explain in detail what differences in demand that the monopoly ferry operator on the east coast island of Onus will experience compared to the demand that a single ferry operator will experience in the perfectly competitive west coast market of Yuri.

Answer 1

Answer:

answer is given below

Explanation:

The monopoly looks at the demand curve of the entire market. A monopoly can reduce production and increase prices or increase production and lower prices for maximum efficiency.

Since the single ferry operator operates in a fully competitive market, this is cost-taking, meaning that the price they receive is set from the demand and supply of the ferry service in the market. Monopoly yachts are price settlers so they set their own prices.

Under optimal market conditions, the average total cost of maintaining a ferry its ferry is the lowest. But the monopoly boat does not operate at the optimum level and has additional potential in the market.

as  the competitive ferry service provider is allocated and economically efficient. There can be no monopoly.

Fully competitive markets tend to get caught up in the market-determined equilibrium price and look at the flat demand curve at the equilibrium price.