1. Briefly explain why some governments are concerned about monopolies. Monopoly means that a company is the only seller of a product with no close substitutes and controls the prices companies charge. The government sometimes grants a monopoly because it is considered not only to be in the public interest, but also to encourage it through price incentives. However, monopolies fail to allocate their resources efficiently, producing less than socially desirable quantities and charging prices above marginal cost. Thus, this inefficiency of the monopoly means that the quantity sold is lower than social needs. In order to solve these problems, government policymakers regulate the behavior of monopolies and attempt to make monopolized industries more competitive2. How does De Beers maintain its monopoly power? In previous years, De Beers had a key resource for diamond production: mines. The monopoly's power resulted from the company's ability to collect rough diamonds from around the world and ship them back, anonymously and without origin. Due to the troubles the company was facing on all fronts: illegal flow of diamonds from Sierra Leone and Angola, Russian diamond strongholds, etc. the once-closed business had to undergo rapid changes. Today, De Beers maintains its monopoly power through marketing activities such as active advertising, for example the Millennium Campaign which was the company's first attempt at branding gemstones, to sell a "diamond De Beers. rather than an ordinary diamond. De Beers strives to remove substitutes for its product and make it unique in order to increase its market power. Possible substitutes for diamonds can be emeralds, rubies and sapphires. If people view them as a substitute for diamond, De Beer's market power will be relatively weak. On the other hand, if the company tries to increase the price of its product, some people may switch to other gemstones. This is why De Beer's strives to distinguish its product from others and to support its image as a rare and unique product. De Beers supports a symbiotic relationship between production and sales. The creation of a single marketing channel has contributed to the rise in diamond prices. Over the past twenty-five years, rough diamonds have outperformed commodities such as gold, oil and aluminum. Diamond prices have also been more stable compared to other products.3. De Beers claims its monopoly power benefits consumers. How ? De Beers claims that its market power benefits consumers because by supporting the rarity of diamonds and actively advertising them as a unique product, De Beers is meeting the emotional rather than practical needs of customers..