Step 1: Read the following scenario.
Imagine that it is the year 2199. Technology has progressed at an incredible pace. The latest discovery is the plutonium engine, which is capable of converting plutonium, a by-product of nuclear fission, into fuel to power the nuclear reactors in our new form of transportation, the rocket-car. However, because the firm that invented the engine, the Futures Unlimited Corporation, already has a government license to control and distribute the quantity of this certain isotope of plutonium on the market, it is now conceivably in charge of a monopoly on plutonium-fueled transportation.
Step 2Use the scenario to answer the following questions.
In a one-page (250-word) document, answer the following questions using the scenario in Step 1:
- Describe the economic outcome of this single-price monopoly in terms of profit. Who gains and who loses in the long run?
- How does the Futures Unlimited Corporation make output and price decisions?
- How do different types of price discrimination affect monopoly profits?
- What methods of monopoly regulation can be implemented against the Futures Unlimited Corporation? Examine the additional impacts such regulations might have on the company and the industry as a whole.
- Imagine the discovery of a different isotope of plutonium for fuel that is available to any business that wishes to enter the market. What type of market is Futures Unlimited Corporation now operating in?
- How do the two markets compare?