What is elasticity? What is the benefit of a monopoly?

Elasticity refers to the net behavioral change among conumers of a product when its prices change. I.e., consumers and producers, in response to a change in price for goods and services. When we say a product is elastic, it means that a change in the price of products results in a change in the product's demand. Therefore, for an elastic good, an increase in demand results from decreasing prices.

Elasticity plays a significant role in the economy since it offers consumers with crucial information. For instance, if in a certain market, the price of elastic goods decreases. Firms are likely to lower the number of goods that they supply, and if the market prices rise, firms are likely to increase the number of goods that they sell. Besides, it acts as a measure in the economy, indicating how much dependency consumers have on particular products.

What are the benefits of a monopoly?

Monopoly refers to a market structure characterized by a single seller, and its product offerings dominate the entire market. The benefits of this kind of market structure include:

• It benefits from economies of scale, being the only supplier of goods in the market.
• It makes long-run economic profits; hence it can use these funds for research and innovation and consolidate its status.
• It acts as a source of revenue for the government i.e.; governments get colossal revenues by taxing monopolies.
• Strengthens weaker sectors of the economy via price discrimination.
• It has a greater ability to charge higher prices and make more profit than in a competitive market.