Andreas Savva 6A
Examine whether Safaricom is likely to be beneficial for consumers
Monopoly is a market structure where one firm supplies all output in the market without
facing competition because of high barriers to entry in the market. This is the case as the
extract mentions that “It has a market share of 71 per cent of mobile phone users in Kenya”.
Therefore, it is controversial whether a monopoly would be beneficial for consumers.
On the one hand, it can be said that the Safaricom monopoly would be beneficial for
consumers. Initially, consumers would benefit if the firm enjoys economies of scale. According
to the source, “Safaricom recorded a 27 per cent increase in profit”, indicating that they are
operating at low costs and are able to gain higher profits due to economies of scale. Since
economies of scale lower AC for firms, businesses will be able to charge a price below the price
charged in competitive market and the output will be at a higher level. Hence, consumers will
benefit from economies of scale a they will experience lower prices as well as a greater output
they can purchase from. Adding onto that,
Examine whether Safaricom is likely to be beneficial for consumers
Monopoly is a market structure where one firm supplies all output in the market without
facing competition because of high barriers to entry in the market. This is the case as the
extract mentions that “It has a market share of 71 per cent of mobile phone users in Kenya”.
Therefore, it is controversial whether a monopoly would be beneficial for consumers.
On the one hand, it can be said that the Safaricom monopoly would be beneficial for
consumers. Initially, consumers would benefit if the firm enjoys economies of scale. According
to the source, “Safaricom recorded a 27 per cent increase in profit”, indicating that they are
operating at low costs and are able to gain higher profits due to economies of scale. Since
economies of scale lower AC for firms, businesses will be able to charge a price below the price
charged in competitive market and the output will be at a higher level. Hence, consumers will
benefit from economies of scale a they will experience lower prices as well as a greater output
they can purchase from. Adding onto that,
