Question

Describe the characteristics of a monopoly and explain how each impacts the problems with monopolies. Please...

  1. Describe the characteristics of a monopoly and explain how each impacts the problems with monopolies.

Please show me your thought process. Please explain it as if you are telling it to someone who has no clue about economics.

Homework Answers

Answer #1

Characteristics of monopoly are:

  • Single seller in the market: There is a single seller present in the market who has control over market and controls prices and brand in the market. There is no competitor so seller can also exploit consumers in terms of quality as well as prices.
  • No substitutes: There is no substitute of goods in the market as there is a single seller and single brand. So, seller can decide his own prices and consumer has no option left other than buying at offered price.
  • Price decider: Firm can set their own prices and also can decide the supply of goods to be supplied in the market.
  • Entry is very difficult. As a single seller is controlling the market so it is very difficult for new firms or sellers in the market and this reduces option in front of consumers.
  • Lack of Perfect Knowledge.
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