Question

What do you understand from the term, ‘monopoly’. Give an example of a government-created monopoly. Is creating this monopoly necessarily a bad public policy? Please explain in your own words

Answer 1

A monopoly is a company that can control the market. For example the government could put a hight import tax on shoes so no one would ship shoes into the countryman this means that the only shoe brand in the country can adjust there prices of their shoes and people would still buy them because there is no other shoe brand. This shows that they have control over the market (Or sitting at at monopoly position)