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"Monopoly is against the interest of the consumer." To what extent do you agree with this statement and why?
Monopolies can be national (royal mail), regional (water companies) or local (petrol station). Unlike a perfect competition situation were firms are 'price takers' and only respond to consumer demand, a monopoly finds itself in an imperfect competition market. In this type of market the firm is more of a 'price maker' and can therefore influence the market price. When comparing monopoly and perfect competition under the same conditions, we can find that the monopolist when in equilibrium produces a lower output and sells it at a higher price than the perfectly competitive firm. Due to t…
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