Question

This year three manufacturers of mattresses have closed shop and there is only one mattress manufacture left. With few additional competitors what will likely happen to the supply of mattresses?

Answer 1

Answer:

the supply will decrease causing an increase in pricing on mattresses.

Explanation:

Monopolism occurs when only one supplier produces a product with no other competitors. They control the supply and price of commodities.

Since other mattresse sellers have closed shop, the final seller will have monopoly of the mattresse market.

In order to maximise revenue he will reduce supply and increase prices so that customers will have no choice but to buy the scarce mattresse at higher price.