why will the monopoly never produce any socially desirable outcome?
Answers
The degrees of competition leads to different market structures with different outcomes to the market.
These are perfect competition, monopolistic competition, oligopoly and monopoly, each with a different outcome to the market. The more desirable structure for the society is perfect competition while others are less desirable such as Monopoly.
A pure monopoly is referred as a single seller of a product. There are various reasons which makes a monoploy market socially undesirable.
Exploitation of consumers- a monopoly market is best example of consumer exploitation. There is literally no competing products and as a result the consumer gets a raw deal in terms of quantity, quality and pricing. The firm find it easy to produce inferior or substandard goods because at the end of the day they know very well that the items will be purchased as there are no alternative products available in the market
Higher prices- in absence of competition in the market , price wars doesnot exists which may have benefited the consumer. As a result of this the firms tend to charge higher prices on goods and services hence inconveniencing the buyer.
Price discrimination- monopoly firms are known for practicing price discrimination where they charge different prices on the same product for different consumers.
Inferior goods and services- competition is minimal or totally absent and as such the monopoly firm may willingly produce inferior goods and services because after all they know the goods will not fail to sell
A monopoly provides less incentive to innovation and leads to inefficiency in productivity.
Explanation:
- Monopoly means only one seller, providing only one product that has no substitute. They are considered as price makers, and present a barrier to entry, and don't allow the forms to compete within the market.
- Monopoly is undesirable in market structure as to generated less wealth for society than a competitive market would. Hence it leads to a lower quantity of goods being produced.
- Hence gives fewer choices to the consumer that is not socially desirable.
Learn more about the the monopoly never produce any socially desirable outcome.
- brainly.in/question/6631232 answered by MVB.