as Think about
monopoly firm in your
area and explain the reason for the existencez
the monopoly (as we have studied in the clash).
Explanation should be based on the
has been discussed in the class.
Answers
Answer:
Single ownership over a resource gives the owner the power to raise the market price of a good over marginal cost without losing customers to competitors.
De Beers is a classic example of a monopoly based on a natural resource. De Beers had a lot of market power in the world market for diamonds over the course of the 20th century, keeping the price of diamonds high.
In practice, monopolies rarely arise because of control over natural resources.
Key Terms
Explanation:
A classic example of a monopoly based on resource control is De Beers. De Beers Consolidated Mines were founded in 1888 in South Africa as an amalgamation of a number of individual diamond mining operations. De Beers had a monopoly over the production of diamonds for most of the 20th century, and it used its dominant position to manipulate the international diamond market.
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