Economics Market Failures Questions
The tragedy of the monopoly refers to a situation where a single firm or entity has exclusive control over the supply of a particular good or service in a market. This leads to reduced competition, higher prices, and limited consumer choice. The monopoly's ability to set prices and control output can result in inefficiencies and market failures. Market failures occur when the allocation of resources by the market is not efficient, and the presence of a monopoly is one such example. Monopolies can lead to a misallocation of resources, reduced consumer surplus, and a lack of innovation, all of which contribute to market failures.