- 9 Marks
Question
a) A monopoly is a market structure in which a single seller or producer assumes a dominant position in an industry or a sector. In most jurisdictions, legislations are in place to restrict monopolies and ensure that one business cannot control the market.
Required:
i) Explain THREE reasons monopoly control over a market might be undesirable.
ii) Suggest THREE ways in which the government might act against monopolies.
Answer
i) Reasons why monopoly control over a market might be undesirable:
- Higher prices due to lack of competition.
- Reduced variety and choice for customers.
- Inefficiency caused by lack of competition.
ii) Ways the government might act against monopolies:
- Prohibit mergers that would create monopolies.
- Appoint regulatory commissions to control pricing.
- Implement price controls or set maximum prices for monopolies.
- Tags: Government intervention, Monopoly, PEST Analysis
- Level: Level 1
- Topic: Monopoly Control and Government Action
- Series: Nov 2024
- Uploader: Salamat Hamid