Question

Millcorp sells wetsuits for deep sea divers. It recently engineered a new material for its wetsuits to better hold in the wearer’s body heat. After a close encounter with a shark, a customer discovers that the new material protects against shark bites. Soon after, Millcorp’s sales explode and it achieves 90% market share in diver wetsuits. Which of the following best describes this situation?a)Millcorp has a lawful natural monopolyb)Millcorp has a lawful innocent acquisition of a monopoly.c)Millcorp does not have a monopoly.d)Millcorp can likely be found guilty of pursuing monopoly power.

Answer 1

Answer:

B) Millcorp has a lawful innocent acquisition of a monopoly.

Answer 2

Answer:

B) Millcorp has a lawful innocent acquisition of a monopoly.

Explanation:

Millcorp has a lawful innocent acquisition of Monopoly because Millcorp isn't aware that the newly acquired material for wet suit protect against shark bite. The motive if acquiring the material was to better hold in the wearer's body heat.

The innocent acquisition of the material and the new discovery has increased the demand for Millcorp product which will increase its profits

Monopoly:This a market structure in which a seller sells a unique product.

The product sold by the seller cannot be easily substituted.

The Monopoly is characterised by

1) Single seller and many buyers

2) Absence of competition

3) No close substitute