Question

• Discuss a real-world example of a firm that you think operates close to perfect competition. What is the firm and what product does it produce? Who are the main competitors? Can you think of a way this firm or industry benefits you as a consumer?

• Now discuss a real-world natural monopoly that you deal with. Is this natural monopoly efficient, or does it cause losses to society? In your opinion, should this natural monopoly be allowed to exist?

Answer 1

1. the firm producing and dealing with the sugar is a market that is close to perfect competition.this kind of firm converts the sugarcane into useable sugars which can be used in the domestic as well as other production units concerned with the sweets etc. groceries shops,departmental stores and whole-sellers are the main competitor under this market.

• this kind of market provides us the best quality product at reasonable price and therefore these are beneficial for the consumer and no firm can charge higher price and price is in general same and consumers are aware of this fact.

2.we face the monopoly in the supply of electricity and demand for this is inelastic and there is inefficiency found concerned with the price charged for the units of electricity supplied.moreover the supplier practice price discrimination which means it charges different price from domestic and commercial user.higher taxes are imposed and due to lack of substitution the consumer surplus is very low in this type of market.

• this kind of monopoly should be abolished and private sectors should be allowed so that the maximum benefit can be achieved and experienced by the consumers.