Business Economics: Monopoly, Price Elasticity, Labor Supply, and External Effects

BUSINESS ECONOMICS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART. A .....................................................................................................................................3
PART B........................................................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES................................................................................................................................1

INTRODUCTION
MAIN BODY
Micro economic is the study of individual and business demand and supply of goods and
services while the macro economics shows the decision of the government and countries and
aggregate demand and aggregate supply of goods and service as a whole (Arunwarakorn,
Suthiwartnarueput, Pornchaiwiseskul, 2017). These report shows the income elasticity , labour
supply curve, quantity demand and supplied at different prices and also SARC curve and the
labour curve with some case studies.
PART. A
Question1
Monopoly is the problematic for an economy or government because due to monopoly of
the company they create many problems in the country and to the people who are consuming
their products. For example when the Standard oil and American Tobacco till 1911 they are
leading the country and which makes them monopolistic in the market but after 1911 many
antitrust cases are filed against the company after the Sherman Antitrust Act 1890 formed. The
government have taken certain steps to restrict the companies who have major market share or
ruling the market as a monopoly and taking actions for any breaking of law by these companies.
This also continue with the American Telephone and Telephone company which violet the U. S
antitrust law at a time when they rule as a monopoly and as a result in splitting the company into
six subsidies known as Baby Bells curbs by the government of America for those companies
which are breaking the laws. Government have been introduced the various regulation factors
that are affecting the monopoly companies, the company which was affected by those regulation
is De Beer company which was known for the mining, production and retails company in the
world. But due to government regulation there been declining in the market share of the
company from 80% in the 1980s to 35% in 2019. whereas, some companies like technology,
consumer products and food beverages companies have been degraded by the consumer and
some of which are accused in media and some are in court.
The below digram shows that the monopoly companies making the unusual profits and taking the
advantage of the been Monopolistic in the market. These increase the market prices according to
the company and makes the high profits. The company average revenue should be the price of

the product but the company is selling above average revenue at P* making huge profits which is
called unusual profits (Fakhr Hosseini, Eisazadeh Roshan, 2020).
Question 2
Illustration 1: Cost curve of monopoly companies making