Future Electronics Inc.'s body scanning machine has been adopted by majority of the healthcare market.As a result,the company demands a high price from its customers,which mainly include hospitals.It is not investing much on innovation and its product variety is also very low.This cost borne by the users in this case is referred to as:
A) marginal cost.
B) social cost.
C) monopoly cost.
D) deferred cost.

Question

Quizplus · Accepted Answer

The cost borne by the users in this case is referred to as monopoly cost. This is because Future Electronics Inc. has a monopoly in the market due to its adopted body scanning machine, and hence can demand high prices from its customers (mostly hospitals) without investing much in innovation or expanding its product variety.