Answer to Question #244083 in Microeconomics for Sebastian

Question

a) Lynn banda runs a sole firm in zambia called nyimbili enterprises such that he is the only supplier of infrared thermometers. Kindly state the scientific name given to Lynn banda and briefly describe the features of nyimbili enterprises. Graphically differentiate nyimbili enterprises from a perfect competitive market.
b) A certain region licensed only one firm to supply tap water within that region. Graphically illustrate why it is more economical to have a sole water supplier in a particular region.

Answer 1

Monopolist

Nyimbili enterprise is characterized by barriers to entry, single seller, price discrimination and individual price making. In this case, profit maximization may be high within the business.

b) Having sole water supplier is to reduce the impacts of excess water pumping. This will lead to uncontrolled water supply from the main source. It may cause breakages of the water equipment easily and reduces vulnerability. Having a sole water supply is easy to control and discover any issue related to the discovered problem. Below is an illustration of the effects of excess water pumping.