Question

The world's second-largest manufacturer of widgets just went out of business. This caused the world's largest widget manufacturer, Widget Town, to be the last remaining widget producer. What is this situation called and how can Widget Town take advantage of it?

Answer 1

In this situation, called a monopoly, Widget Town becomes the only remaining widget producer after the world's second-largest manufacturer goes out of business. Widget Town can take advantage of this by increasing prices since there are no other competitors, controlling the supply to create demand, focusing on innovation and expanding their product range, and leveraging their dominant position for favorable deals. However, it's important to ensure fair competition and consumer welfare, as regulators may step in to prevent abuse of market power.

Answer 2

This situation is called a monopoly. A monopoly occurs when a single company or entity becomes the only provider of a particular product or service in the market.

Step-by-step explanation:

In this case, Widget Town is the only remaining widget manufacturer, giving them a monopoly on the widget market. This means that Widget Town can set the price for widgets as high as they want because there are no other competitors to drive the price down. However, Widget Town needs to be careful not to take advantage of their monopoly position too much, as this could attract unwanted attention from government regulators, who may investigate them for anti-competitive behavior. Instead, Widget Town can take advantage of their monopoly by investing in research and development to improve their product, increasing their marketing efforts to boost demand, and expanding into new markets. They could also consider partnering with other companies to create complementary products that can be sold alongside widgets, increasing their revenue streams. Overall, while a monopoly can provide a significant advantage to a company, it is important to use this advantage responsibly and ethically to maintain a positive reputation and avoid regulatory issues.