Discuss the view that monopoly power is always negative from a consumer and economic view point.

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Discuss the view that monopoly power is always negative from a consumer and economic view point (15)

A monopoly is a market structure where only one firm supplies the output of the industry. There is only one firm in the industry, which has control over the supply of the product and can maintain control in the long run. The firm is able to dominate a market or several firms collude to influence the output and price, and therefore able to increase their collective profits. Monopoly power has benefits as well as disadvantages in both the view of the consumer as well as from an economic view point.

From the consumers' point of view, monopoly power may be seen as negative because the main aspects that the consumers consider are the price of the products and the amount of consumer surplus. Monopoly power usually means that a higher price will be charged and output will be low. This is because, due to the high barriers to entry causing no competition. The graph below shows that in comparison to the perfect competition market structure, monopoly charges higher prices. The graph also shows that, because of the high prices and low