![]() ![]() The features of monopolies are as follows: This leads to an extraordinary amount of power to the company at the center of a monopoly. The features of a monopoly are all based on the fact that there is only one seller and many buyers thus creating only one source of supply. (Recommended blog - Elasticity of Demand) But before reading into the pros and cons, it is important to gain a grasp on the features of a monopoly after which its advantages and disadvantages along with state restrictions make a lot more sense. That is, if the good’s price is hiked up, people will continue to buy it, making these goods in direct contradiction with the law of demand which states that the demand for a good is inversely related to its price.Ĭompanies in a monopoly market system have an undue advantage over those in competition. However, in case of inelastic goods, this point is overridden.Īn inelastic good is a good whose demand does not readily respond to price. They can decide everything regarding the transaction with the sole exception of not being able to control demand. The entire terms of the interaction are on the business’s terms. ![]() The company can decide whom to sell to, at what rate and what quantity. In theory, a monopoly represents a company with complete and absolute control over the sale and supply of a good. Whenever we hear the term monopolistic powers or monopolizing the market, it refers to the practices a business undertakes to become the sole seller of their respective goods and services. In economics, a monopoly refers to a market system where there is only one seller and many buyers. However, the game was born out of the concept. Surprisingly enough, a monopoly in economics refers to something different. They think of buying houses and hotels and charging rent. When most people hear the term monopoly, they think of the board game with the fake englishman on the board. ![]()
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