MONOPOLIES

Date: 2015-10-07; view: 588.

Reading 2

D Vocabulary

B Comprehension

Now read the text again and decide whether the statements are true or false.

1 Market structure describes how competitive the market is.

2 Perfect competition and pure monopoly are opposite.

3 Four conditions are necessary for perfect competition to exist.

4 In perfect competition, every company makes a slightly different product.

5 Perfect competition makes it easy for new companies to start trading.

6 When there is perfect competition, companies are able to set any price they want.

Complete each sentence with the following words:

aggressive, cables, illegal, innovation, legal, naturally, network, occurs, printing

1 A …… is a set of connections.

2 When one company gains control of another company it is called a …… .

3 Raw materials are things like wood or oil that exist …… .

4 Electricity travels along …… to reach our houses.

5 …… people get what they want by violence and force.

In monopoly, one company has a much larger market share than any other company. In fact, their share is so big that other companies cannot really compete. When there is a monopoly, the normal laws of supply and demand do not always work. Monopolies come in different kinds, but a pure monopoly is when there is only one company in the market providing a particular product or service. This situation, in fact, is the exact opposite of perfect competition. How do pure monopolies happen?

Some monopolies occur naturally. This happens when a company manages to create an economy of scale. An economy of scale is when variable costs of production increase more slowly than increases in supply. Every company would like to be in this situation. Unfortunately, it's not easy to achieve. Economies of scale are possible for companies which need a lot of money to set up but much less money to run.