Question

What are the three reasons that a market might have a monopoly? • Give two examples of monopolies and explain the reason for each.

Answer 1

Reasons for monopoly

1. When the government decides to give a single entity the exclusive right to produce some goods and services
2. If a single firm owns a key resource for production
3. When the costs of production makes a single producer more convenient than a large number of production.

Examples of monopolies

1.The Microsoft and Windows is a monopoly because it enjoys network externalities .

2.Aramco in Saudi Arabia enjoys monopoly because the government gives it the exclusive right to operate