Answer to Question #301281 in Microeconomics for Axis

Question

600 words total

By giving examples describe what happens when we have a lack of competition in a monopolistic market?

By giving examples describe what happens when there is a lack of substitutes in a monopolistic market?

Answer 1

A monopoly is generally characterized by the absence of competition and is likely to cause the following;

1) high costs for consumers,

2) inferior products and services, and 3) corrupt business practices.

The typical political and cultural objection to monopolistic markets is that a monopoly, in the absence of other suppliers of the same product or service, could charge a premium to their customers. Consumers have no substitutes and are forced to pay the price for the goods dictated by the monopolist.