Discussion questions:
1 What are the factors of production and what role do they play in Economics?
2 A natural monopoly occurs when there are large-scale economies in production, so the market can support only one firm. In the light of the above statement, please explain the concept of controlling market power and anti-trust and regulation. How does the government use anti-trust policies to break up some dominant firms? Cite examples to support your answer.
3 Why do perfectly competitive firms make zero economic profit in the long run?
4 Explain why a monopolist must lower its quantity relative to a competitive market to maximize its profits.
5 How do barriers to entry create market power? Why does the government grant patents to companies that research new drugs?
6 Why does entry into markets decrease firm profits and what is "monopolistic" about monopolistic competition?