Explain the disadvantages of a monopoly?

Answer 1

The person who holds the monopoly will have the option to control the situation to his own advantages & will have unfair advantage over others. This results in unfair competition. One of the solutions to this is granting limited monopoly to encourage creativity like Patents, designs, copyrights etc. The person who holds the monopoly will have the option to control the situation to his own advantages & will have unfair advantage over others. This results in unfair competition. One of the solutions to this is granting limited monopoly to encourage creativity like Patents, designs, copyrights etc.

1. First, monopolies cause reduction of the quality of the products. In fact, the company that has a monopoly will buy the cheap primary materials to reduce the total cost of the products.
2. Second, monopoly causes a reduction satisfaction of the customers. Because there is only one provider or producer, the customers have no choices and they are coerced to buy this product when they need it.
3. Third, monopoly causes increased prices. Because there is only one company can provide or produce the product, the company can increase its prices to make the highest profit.
4. Fourth, monopoly may cause many disadvantages for the employees of the company that has a monopoly. Actually, company can decrease the salaries for its employees because it wants to reduce its total cost.

In conclusion, decreasing the qualities of the goods, decreasing the gratification of the consumers, uprising the prices and decreasing the advantages of the employees in the companies that have monopoly are the main negative effects of the monopoly.
customer exploitation

high prices

Lower quality