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Assume the average salary for a college philosophy professor is $50,000. Suppose businesses decide they need in-house instructors to teach ethics to employees, and they begin hiring philosophy professors at a salary of $75,000. What are the short-term and long-term effects of this supposition?
Natural Monopoly
A market condition where a single firm can provide a good or service at a lower cost than any potential competitor, often due to economies of scale.
Economies of Scale
Economies of scale occur when increasing the production scale leads to a decrease in the long-term average costs, often due to more efficient use of inputs.
Exclusive Franchise
A legal agreement granting one party the sole right to sell or distribute a company's products or services in a particular market area.
Conglomerate Merger
involves the combination of firms that operate in unrelated business areas, aiming for diversification and reduced business risk.
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