Explain the advantages and disadvantages of monopoly.
Explanation
Advantages of Monopoly are:
(i) Standardization which is the basis of cheaper production is better practised under monopoly.
(ii) Centralized management.
(iii) Economies of large scale production.
(iv) Greater efficiency resulting from an assemblage or pool of specialized managerial skill.
(v) Avoidance of duplication and wastes often associated with perfect competition especially in the supply of social services.
(vi) A greater opportunity to expand operations because the uncertainty usually associated with a state of free competition has been eliminated.
Disadvantages of Monopoly are:
(i)There is the danger of exploitation of the consumers:
(ii) Inefficient and unprofitable nature of state monopolies often as a result of political interference and nepotism.
(iii) Desire for supernormal profit may lead to restriction in output and hoarding.
(iv) Consumers lose freedom of choice.
(v)Absence of competition often results in decline of efficiency