g A monopoly may exist because Question 21 options: a) government has refused to grant a public franchise. b) one firm has the e
xclusive ownership of a necessary resource. c) the firm is so large and is currently experiencing such vast diseconomies of scale that it can out-compete all newcomers. d) a and b e) a, b, and c
b) one firm has the exclusive ownership of a necessary resource
Explanation:
A monopoly is a situation where a single supplier of a commodity.
This gives the supplier the benefit of fixing a price that maximises profit for them. Consumers have no alternative so they pay the high price for the commodity.
There is no substitute good so there is no competition from other firms. Price is usually set at a high level so that the monopoly enjoys profit high above its marginal cost.
Monopolies exist because one firm has the exclusive ownership of a necessary resource not available to other firms.
B. one firm has the exclusive ownership of a scarce resource.
Explanation:
Monopoly can be regarded as market structure whereby a single seller thrives, this is a structure whereby the seller sells a unique product in the market. As far as monopoly market is concerned, no competition is been encontered by the manufacturer , because he is the only one selling goods with no close substitute. As a result of this there is restrictions of the entry of other sellers in the market.
It should be noted that monopoly may exist because one firm has the exclusive ownership of a scarce resource.
