Q. 10

Explain the follo

Answer :

(a) Restriction to Entry-

● It is not possible for permitting entry into this industry.

● Even if a new fIrm is admitted into this industry, the Monopoly will itself remove it.

● This barrier to entry may be legal such as licensing or due to the restrictions created by the firm in the form of the cartel.

● This allows the monopolist firm to earn an abnormal profit or loss in the long run.

● For example, the production of many defense goods is a Monopoly of the government.

(b) Price Discrimination-

● A monopoly has the power to exercise price discrimination.

● Price discrimination refers to the practice of selling the same commodity to different customers at different prices.

● For example, a doctor may charge a lesser fee for the poor and higher fees from the others.

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