Essay On Monopoly Market

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Economy can be defined as the production and consumption of goods and services and the supply of money in the market. It can also be defined as the process or system by which goods and services are produced, sold and bought in the market. Monopoly is a market characterized by a single seller selling a unique product in the market. It is rare to find pure monopolies operating in practice in the real world. In this market, the seller neither faces competition nor has any close substitutes of the products. Example of products in monopoly market is electricity, water, cable television and local telephone services. Factors like government license, ownership of resources, copyright and patent and high starting cost make the entity a single seller of goods which cause barriers to entry into the monopoly market. Characteristics related to the monopoly market make the single seller the market controller as well as the price maker (Mankiw, 2008). Islam has its own unique economic system. According to Sheikh Ghazali Sheikh Abod, Syed Omar Syed Agil, and Aidit Haji Ghazali (2008), the foundation of Islamic system being different from that of capitalism and socialism, which are both earth-bound and not oriented to spiritual values, the…show more content…
In order to maximize the profits, monopolists increase the price and reduce the quantity of outputs when demand is inelastic and vice versa when the demand is elastic. This will create an underutilization of the resources and the ramification is the increase in unemployment and dead-weight loss in the society. The higher price charged by the monopolists obviously will reduce the wages for the laborers and thus increases the social cost of monopoly. According to Wan Sulaiman Wan Yusoff (2014), these situations are not consistent with the injunction of Al-Quran and Al-Sunna, because they are antisocial and exploit as well as deprive the poor and the community as a

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