Question

Using an appropriate example, explain the FOUR (4) characteristics of a monopoly firm in Malaysia.

(2000 words)

Answer 1

The four important characteristics of monopoly are as follows

1) Single seller

2) High barriers of entry

3) Profit and price maker

4) Price discrimination

Example of Monopoly in Malaysia : Astro

Astro is the sole satellite television provider for Malaysia till 2017. Malaysian government gave licence with agreement in 1997 upto 20 years which ended in 2017. In these 20 years no other company able to enter the satellite television industry market due to government support for Astro which made no other company to enter the market. When there is sole seller than the economic of sales will also be present thus making that sole supplier to earn profits. Astro also earned profit as it is the only supplier.

Astro became a natural monopoly due to government support.