The Monopoly and Fair Return Sample Essay

The Monopoly and Fair Return Sample Essay The fair return is of great importance in assessing the comparative merits of various investments. In this regard, it is of significant importance whether this rule is calculated before or after the tax deduction. For most types of investments, the fair return after the tax takeout is more informative. Fair returns from investments most often are made more than once a year. And this means that it is necessary to analyse the annual interest rate (APR) to obtain comparable results. Since the definition of marginal average costs and marginal return, as well as the level of demand, is difficult, the fair return rate is used to determine the level of prices that are most useful. The rate of profit from 15% to 50% is quite acceptable, and the one that is more than 100% refers to super-profits. At the same time, it is necessary to remember that the turnover of the advanced capital in a number of industries may not be one year and it should be taken into account when calculating the rate of return. The market is monopolised when the products that do not have close substitutes are offered by a single seller to a wide audience because the entrance to this market is closed for other sellers. The market may be closed either due to a legislative ban on certain economic activities (state monopoly on alcohol or gambling, patented manufacturing techniques) or because of fear of large losses in case of an unsuccessful attempt to enter the industry. Sometimes, so-called natural monopolies appear that become the only producers of products not because of the closure of the market but because of the continued growth in returns. What combination of production/price will be chosen by a monopoly depends not only on costs but also on the goals. Unlike a perfect competitor, a monopoly does not necessarily have to strive to maximise profits. The position of a single seller allows it to set other goals, for example, maximising the fair return or profit margins. In addition, a monopoly can sell the same products at different prices at the same time. The usual average return of monopolies is fixed and assumes the character of permanent rent. And over it, a stable increment is formed that is an additional profit realised at a monopoly price. It turns into a super profit. The buyers of goods produced by a monopoly initially bear losses equal to monopoly profits. They include these losses in the costs of production and the prices of their goods. Thus, they shift their losses to other industries. As a result, the average return of total fair is reduced by a number of monopoly profits. And the sum of the prices rises as a result of the growth of production costs for many goods. The higher the monopoly profit is the lower the mass and the rate of average profit. Thus, a stable monopoly profit does not appear as a form of manifestation of the average profit. On the contrary, it denies the latter, distorts and hinders the operation of the mechanism of product prices in the non-monopolistic sector of production. The development of a stable monopoly profit occurred through the distribution of joint-stock companies. The effective equalisation of fair returns in the monopolistic sector does not mean the restoration of the law of average profit in it in its previous form. The averaged profits of monopolised industries are just average monopoly profits. The fair return is the form of realisation of monopoly profit. This is due to the fact that the profits of monopolies equal the difference between the sum of the prices of the goods sold by them and the sum of their production costs.