Question

Government and legal regulation of prices is especially relevant in which market situation?

विकल्प

• Where demand is perfectly elastic

• Where firms face intense competition

• Where products are sold only in bulk

• Where firms have monopoly power

Answer 1

Government and legal regulation of prices is especially relevant where firms have monopoly power. A monopolist, facing no competition, could charge excessively high prices, so government intervention becomes necessary to protect consumers.