Multiple choice

Monopolies tend to become less efficient and less innovative over time. Comment: (a) Complacency takes over (b) Lack of competition in market (c) New entrants find the entry barriers (d) Non-availability of substitutes

Which of the above is/are correct?

  1. Only (a)

  2. Only (b)

  3. Both (b) and (c)

  4. All of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All these factors tend to make a monopolistic company lose efficiency and innovation. But this is a very harmful in the sense that some new entrants may overcome entry barriers and pose competition.

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