Monday, February 10, 2020

Introduction to Economics Essay Example | Topics and Well Written Essays - 1500 words - 1

Introduction to Economics - Essay Example This mainly depends on the type of the product or service offered. As such, this essay seeks to explain different factors that cause a monopoly market. It also seeks to discuss the benefits of a natural monopoly in the market with regards to the type of products offered. A monopoly market can be defined as a market environment where only one single supplier operates in that particular market and there is no close substitute to the products or services offered (Roos, 2008). A monopoly usually exists in electricity as well as postal services industry. In such kinds of industries, the government has power to control them to protect the interests of the consumers. A good example of a natural monopoly is Australia Post which offers different postal services as well as stationary to different customers. This industry is regulated by the government and it is responsible for setting prices for different products offered. In this case, it can be noted that the government is responsible for cr eating the monopoly in the postal industry so as to safeguard the interests of the people at large. Usually, confidential documents are conveyed to different destinations inside as well as outside the country hence there is need for this industry to be regulated by responsible authorities to avoid irregularities in handling different postal orders. In the event that some orders have been lost, it becomes easier to trace them given that there will be only a single player in the industry with clearly defined channels of delivering different postal orders. The other factor that may also contribute to the growth of the monopolist market is that this is a service industry which ought to meet the needs and interests of the people at a subsidised rate whereby the price of services offered will be determined by the responsible authorities. If there are many players in this particular industry, the competition that will arise can cause the prices to increase such that they will expensive to many people. The other aim is to maintain the quality whereby there will be few players in the industry. In most cases, it is the government which creates a monopoly market to satisfy the different needs of different consumers. There will be laws that are meant to guide the provision of certain products and services to the customers. A natural monopoly is usually regulated by the government to ensure that the industry conforms to the expected standards of operation. In some cases, a monopoly market can be caused by rising factors of production if it is a manufacturing industry. Information about some of the factors that give rise to a monopoly market can be viewed at . If the factors of production are very high, some players in the industry will be eliminated and only big organisations that are able to reap economies of scale from their operations are able to survive in that market which creates a monopoly. If other players are not able to meet the operational costs, the result is t hat they fold their business and only established organisations can continue to operate. The other factor that may cause a monopoly market is that certain products and services need to be regulated and controlled so that they conform to the expected standards by the regulatory authorities. In some cases, only one company will have great control of the supply of all the required material in

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