The thing that I found most interesting and learned from this chapter is that when graphing curves for monopolies, there is no supply curve. After reading this though, it makes perfect sense. Because a monopoly is the sole provider of a good, it is a price-maker. And there is no supply relation between price and the quanity of output produced. A monopoly will maximize profit by producing the quanitity at which MR=MC, but then it will choose the price at which that quantity is demanded. And whereas a competitive firm will choose a point at where P=MR, a monopolistic firm's price will exceed its marginal revenue.
In the text it states that goverment-created monopolies usually arise due to 1) political clout or 2) because the goverment believes it would be in the best interest of the public. I am not sure that either of these would be a good reason to create a monopoly on trash removal. I think the reason for goverment to create this monopoly would be to generate income.
We were able to choose between two private companies, and chose who we thought had the best prices, offerings (such as recycling pickup) and schedule. I personally favor being able to choose. I guess I'm just conservative like that. :)
That's all for now...
Ciao!
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