Author Question: It is possible that a multi-product monopolist will reduce the quality of a product below what its ... (Read 13 times)

CORALGRILL2014 · **on:** Jul 1, 2018

It is possible that a multi-product monopolist will reduce the quality of a product below what its users prefer in order to make more profit.

Indicate whether the statement is true or false

Question 2

An unchallenged monopoly in a product market has a tendency to be lazy, but that tendency can be limited by the capital market.

Indicate whether the statement is true or false

Mholman93 · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

T If the products are substitutes and buyers of a high-quality one will pay a high price for it, the monopolist may want to reduce the quality of the other product so it is less attractive as a substitute for the high-priced product.

Answer to Question 2

T A firm that is not achieving the profit that it might can be taken over by a raider, who may sack the underachieving management and install new management.