ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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it would be impossible
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not all monopolies are bad
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the government itself is a monopoly
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there aren’t any monopolies anymore
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Detailed explanation-1: -The government does not try to eliminate all monopolies. Why? Not all monopolies are bad. market efficiency.
Detailed explanation-2: -The advantage of monopolies is the assurance of a consistent supply of a commodity that is too expensive to provide in a competitive market. The disadvantages of monopolies include price-fixing, low-quality products, lack of incentive for innovation, and cost-push inflation.
Detailed explanation-3: -Monopolies are generally considered to be bad for consumers and the economy. When markets are dominated by a small number of big players, there’s a danger that these players can abuse their power to increase prices to customers.
Detailed explanation-4: -Answer and Explanation: If government officials break a natural monopoly up into several smaller firms, then the average costs of production will increase.
Detailed explanation-5: -Monopolies contribute to market failure because they limit efficiency, innovation, and healthy competition. In an efficient market, prices are controlled by all players in the market because supply and demand swing more toward equilibrium.