Question

Please help me in both questions, thank you very much :)

QUESTION 6 According to the Herald Sun Newspaper, a study by the Centre for International Finance found that Australian monopolies perform better compared to monopolies elsewhere. Surprisingly, the research found that companies with monopoly power in Australia were three times more likely to invest in research and development than companies in competitive markets Which of the following are valid explanations for the existence of monopolies? 1. They have exclusive rights over key inputs. 2. Entry into an industry can be blocked by legislation, allowing only one supplier to exist. 3. Economies of scale. Only 1 is correct. Only 2 is correct. Both 1 and 2 are correct. Both 2 and 3 are correct. All three are correct.

Answer 1

All the three options are correct in the question 6. when there is a legalised blockage to entry of new firm it is called legal monopoly. Control over a key resource is a major determinant of monopoly along with the economies of scale.

The ability to set price is called market power. Select market power.

Profit maximization is the sole objective of a Monopoly so price of bottled water will be set so that the profit is maximized. Select maximized

The correct choice is differentiated. this is because the monopolistic competition has companies selling differentiated products.