Sub: Economics Topic: Micro Economics
Question:
A brief description of any non-legal conditions or circumstances in a market
which can limit the power of the monopolist.
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There is a perception in the real world that monopolies are “all powerful”. This is simply not the
case. Describe any non-legal conditions or circumstances in a market which, if they develop, can
limit the power of the monopolist. Explain.
Solution:
There is a perception in the real world that monopolies are “all powerful”. This is simply not the
case. Describe any non-legal conditions or circumstances in a market which, if they develop, can
limit the power of the monopolist. Explain.
The Monopoly is a market that has only one seller, but many buyers and therefore he is
determining the price and output in the market. The following are the some of the powers
which limit the power of the monopolist in the market.
Economies of Scale
The Economies of Scale (diseconomies of scale) is the one of important tool which can
limit the monopoly power in the market.
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Sub: Economics Topic: Micro Economics
Welfare lose
As we know that, the monopoly can fix his product price level at what level he wants. If
the society’s welfare loss is higher, it will affect the demand for the monopoly product.
This would help to limit the monopoly power in the market.
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*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.