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2.1 Give an example of a natural monopoly industry operating in South Africa.
2.2 State the efficient quantity. Justify your answer.
2.3 Differentiate monopoly quantity from efficient quantity
2.4 Why are monopolies considered to be detrimental to consumers?
2.5 Discuss the effects of the hard lockdown on Eskom's operations?
QUESTION 3
Research
3.Conduct research and determine if Pepsi and Coca Cola are a duopoly.



Answer :

GinnyAnswer

Final answer:

Explanation of natural monopolies, efficient quantity, detrimental effects of monopolies, and impact of lockdown on Eskom.


Explanation:

Natural monopoly: A natural monopoly occurs when the most efficient number of firms in an industry is one due to economies of scale. An example in South Africa is Eskom, the national electricity utility.

Efficient quantity: The efficient quantity in a natural monopoly is where the marginal cost curve intersects the demand curve. At this point, allocative efficiency is maximized.

Monopoly vs. Efficient quantity: A monopoly produces where marginal revenue equals marginal cost, resulting in lower output and higher prices compared to the efficient quantity.

Detriment of monopolies: Monopolies can exploit market power to raise prices, reduce choices, lower product quality, restrict innovation, and harm consumer welfare.

Effects of hard lockdown on Eskom: The lockdown could influence Eskom's operations by altering electricity demand patterns, affecting revenue, and potentially impacting maintenance and financial stability.


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