Answer to Question #140420 in Microeconomics for Nami

Question

It is argued that monopoly is a bad thing for consumers, but a good thing for producers. Illustrate the argument using diagrams and assuming the industry is faced with constant cost.

Answer 1

With higher prices, consumers will need less quantity and thus the quantity produced and consumed will be less than it would be under a more competitive market structure. In light of this argument, monopolies are never a good thing for consumer but a good thing for producers. For producers, they enjoy the monopoly of being the sole suppliers of a product which they sell without competition. In a monopoly, consumers have no alternative regarding the purchase of a particular product.