1. We're okay with the Wolf Pack (Ice hockey team) as a monopoly in Connecticut. Why we should not be okay with Amazon's monopoly power? To answer this question, think about barriers to entry and the type of monopoly the Wolf Pack is in Connecticut.
2. Where have the bookstores gone? State the 2 main forces driving the exit of local bookstores usingEYE on RECORD STORES

Other Market Types Monopoly is a market for a good or service that has no close substitutes and in which there is one supplier that is protected from competition by a barrier preventing the entry of new firms. Monopolistic competition is a market in which many firms compete by making similar but slightly different products. Oligopoly is a market in which a small number of firms compete.

Read Eyes on the record store below

In 1995, the market for music was a very competitive market in which more than 8,000 record stores sold music. Figure 1 illustrates the average total cost curve, ATC, marginal cost curve, MC, and marginal revenue curve, MR0 , for one of these stores. Record stores charged $20 a CD and made zero economic profit. The market was in long run equilibrium. 89 92 21

Amazon took advantage of the technological advance made possible by the Internet. Amazon.com started retailing books in 1995. Soon Amazon.com started selling CDs.

In Figure 2 shows the economic profit available to Amazon at the price charged by traditional record stores ($20 a CD). Positive economic profit attracts new entry. Technology also kept advancing, with MP3 files replacing physical CDs. 93 94 22

Figure 3 shows where competition among online music download stores drove the price ($10 a CD). Economic profit vanished in a new long-run equilibrium.

Figure 4 illustrates the economic loss incurred by a traditional record store facing competition from online retailers. With a loss exceeding TFC, the traditional record store exits. That's where the record stores have gone. They've exited to avoid the losses created by online competition.

Also understand, OUTPUT, PRICE, PROFIT IN THE LONG RUN

The Effects of Entry In the long run, firms respond to economic profit and economic loss by either entering or exiting a market. Economic profit is an incentive for new firms to enter a market, but as they do so, the price falls and the economic profit of each existing firm decreases.

Change in Demand,

The difference between the initial long-run equilibrium and the final long-run equilibrium is the number of firms in the market. An increase in demand increases the number of firms. Each firm produces the same output in the new long-run equilibrium as initially and makes zero economic profit. In the process of moving from the initial equilibrium to the new one, firms make positive economic profits.

Two forces are at work in a market undergoing technological change. 1.Firms that adopt the new technology make an economic profit. So new-technology firms have an incentive to enter. 2.Firms that stick with the old technology incur economic losses. These firms either exit the market or switch to the new technology.