Final answer:
Monopolies can lead to higher prices for consumers because they have the power to set the market price and create barriers that prevent other competitors from entering the market. These monopolistic practices reduce competition and discourage innovation, which can be detrimental to consumers.
Step-by-step explanation:
In the context of the different degrees of competition, monopolies are considered illegal because they result in higher prices for consumers. This is due to the fact that monopolies can exercise some power to choose their market price without competition driving it down. Barriers to entry, such as legal restrictions, control of a physical resource, or technological advantages, discourage or prevent potential competitors from entering a market. As a result, these barriers to entry can lead to a situation where if one firm supplies the entire market, no other firm can enter without facing a cost disadvantage, ultimately leading to a lack of competition and innovation, as competitors are unable to challenge the monopoly's position.
Monopolies are considered illegal for several reasons, one of which is that they result in higher prices for consumers. When a company has a monopoly, it has the power to set prices at levels that maximize its own profits, often at the expense of consumers who have limited alternatives to choose from. This lack of competition allows monopolies to charge higher prices than would be possible in a competitive market.