Exploring Price Monopoly in the Market
What type of monopoly exists when a company can price products so low that other firms can no longer compete?
O Price monopoly
O Natural monopoly
O Sanctioned monopoly
O Pure monopoly
Answer:
A price monopoly occurs when a company sets such low prices that other firms can no longer compete.
When a company can price products so low that other firms can no longer compete, this type of monopoly is known as a price monopoly. In a price monopoly, the dominant company effectively sets the price of its products, which is significantly lower than what other firms can offer. This pricing strategy drives competitors out of the market, allowing the monopolistic company to have sole control over the industry.
Price monopoly can be a powerful position for a company as it eliminates competition and enables the monopolistic firm to dictate prices and take a large share of the market. This can lead to increased profitability and market dominance for the company.
It is important to note that price monopolies can raise concerns about anti-competitive behavior and unfair market practices. Government agencies may intervene to regulate such monopolistic behavior to promote fair competition in the market and protect consumer interests.
Overall, price monopolies can have significant impacts on the market dynamics and competition, influencing consumer choices and industry structures.