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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