Characteristics of Indifference Curve
1 . Economies of Scale.
If the firms produces within an industry with very high set costs, buyers can benefit from a huge firm which can exploit financial systems of level. Economies of scale result in lower long haul average costs and therefore provide the potential of lower prices. Case in point: Would you wish several firms providing plain tap water? Would it sound right to have 2-3 companies sitting a network of water pipes and sewage systems across the country? Number It is better to acquire 1 organization. This is an example of an industry the natural monopoly because of the considerable fixed costs. Industries like car development and aircarrier production likewise have significant economies of level so it is practical for companies to have some extent of marketplace power. 5. However , just because a firm provides monopoly electricity doesn't imply that the sector necessarily provides economies of scale or perhaps that reduce average costs lead to lower prices.
2 . R and d
Firms with monopoly profit can use their profit to purchase new products and technologies that benefit customers in the long run. elizabeth. g. oil companies who find new sources of oil 3. Monopoly Firms will be Efficient
A spat popular with those who claim to know the most about finance of the Austrian School of Economics is that firms who have gain monopoly power will be invariably successful, innovative and efficient. elizabeth. g. Google have monopoly power but who can take action any better? 4. International Competition
A domestic monopoly may face international competition, therefore it still looks incentives to slice costs and stay efficient. Yet , it can also take advantage of economies of scale.