Question

Enlist the merits of monopoly.

Answer 1

1. High Level of Skills and Efficiency: If a monopoly arises from the merger of many firms, it can lead to improved skills and efficiency within the firm.
2. High Level of Research and Development: Monopoly firms often have huge resources that enable them to invest in research and development, leading to innovations such as new production techniques, new products, and new uses for existing products.
3. Economies of Scale: Monopoly firms may benefit from economies of scale, such as cheaper raw materials, better utilization of resources, and lower advertising costs, potentially allowing them to charge lower prices than under free competition.
4. Law of Increasing Returns: A monopolist producing under increasing returns can produce more at a lower cost and sell at lower prices, increasing total revenue and consumer benefit by offering larger output at cheaper prices.