top of page

Pros and Cons of Consumers from Firm Becoming Monopoly


Discuss whether or not consumers would benefit from a firm becoming a monopoly. In assessing each answer, use the table opposite. Why they might:


Market Structures and Competition

Frequently asked question

Preview Answer

I. 🍃Introduction
- Definition of a monopoly
- Importance of studying monopolies in economics

II. Advantages of a monopoly
- Lower average costs of production due to economies of scale
- Lower prices for consumers
- Larger profits for the company, which can be spent on R&D
- Improved quality of the product due to higher R&D

III. Disadvantages of a monopoly
- Use of market power to increase prices
- Lack of competition reduces pressure to improve quality
- Consumers have less choice
- Lack of availability if the monopoly restricts supply to drive up price
- Higher average costs due to diseconomies of scale

IV. State-owned monopolies
- Definition and examples
- Goal of increasing social welfare
- Potential drawbacks

V. 👉Conclusion
- Summary of advantages and disadvantages of monopolies
- Importance of balancing market power with consumer welfare

Ops... End of preview!

Already purchased Economics Study Pack subscription? Amazing! Click below

What's included 
✔️Full essay
✔️Marking Schemes
✔️Examiner's report

Economics Study Help
bottom of page