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Home Price and Output Determination Under Monopoly

Price and Output Determination Under Monopoly:

 

What is Monopoly?

 

Monopoly is from the Greek word meaning one seller. It is the polar opposite of perfect competition. Monopoly is a market structure in which one firm makes up the entire market. Continue reading.

 

Conditions/Base of Monopoly Power:

 

The main conditions which give rise to monopoly are various. They are called collectively, "Barriers to Entry". These barriers block the entry of new firms into the industry and thus create monopoly. Continue reading.

 

Monopolist's Demand Curve:

 

Under perfect competition, the demand curve which an individual seller has to face is perfectly elastic, i.e., it runs parallel to the base axis. The competitive seller being unable to affect the market price sells its output at prevailing market price. Continue reading.

 

Short Run Equilibrium Price and Output Under Monopoly:

 

In the short period, the monopolist behaves like any other firm. A monopolist will maximize profit or minimize losses by producing that output for which marginal cost (MC) equals marginal revenue (MR). Continue reading.

 

Long Run Equilibrium Under Monopoly:

 

The monopolist creates barriers of entry for the new firms into the industry. The entry into the industry is blocked by having control over the raw materials needed for the production of goods or he may hold full rights to the production of a certain good (patent) or the market of the good may be limited. Continue reading.

 

Comparison Between Monopoly and Competitive Equilibrium or Perfect Competition:

 

The main points of difference and similarities of monopoly model with competitive model are as follows: Continue reading.

 

Misconceptions Concerning Monopoly Pricing:

 

A question can be asked; can a monopolist charge very high price for his product? The answer to this question is not a difficult one; When a monopolist has to determine the price of his product, he has two options before him. Continue reading.

 

Monopoly Regulations:

 

A monopolist, being the sole supplier creates some undesirable aspects in the market: Continue reading.

 

Monopoly Price Discrimination:

 

While discussing price determination under monopoly, it was assumed that a monopolist charges only one price for his product from all the customers in the market. Continue reading.

 

Price and Output Determination Under Discrimination Monopoly:

 

Price discrimination takes place when a given product is sold by a monopolist at more than one price and these price differences are not justified by cost differences. Continue reading.

 

Assessment of Discriminating Monopoly or Price Discrimination:

 

Price discrimination is said to occur when a monopolist charges more than one price for an identical product and these price differences are not justified by cost differences. Continue reading.

 

Dumping:

 

Dumping is a special case of price discrimination. Dumping is a situation in which the price, a firm charges for its goods in a foreign market is lower than either the price it charges in its home market or the production cost. Continue reading.

 

 

 

Principles and Theories of Micro Economics
Definition and Explanation of Economics
Theory of Consumer Behavior
Indifference Curve Analysis of Consumer's Equilibrium
Theory of Demand
Theory of Supply
Elasticity of Demand
Elasticity of Supply
Equilibrium of Demand and Supply
Economic Resources
Scale of Production
Laws of Returns
Production Function
Cost Analysis
Various Revenue Concepts
Price and output Determination Under Perfect Competition
Price and Output Determination Under Monopoly
Price and Output Determination Under Monopolistic/Imperfect Competition
Theory of Factor Pricing OR Theory of Distribution
Rent
Wages
Interest
Profits
Principles and Theories of Macro Economics
National Income and Its Measurement
Principles of Public Finance
Public Revenue and Taxation
National Debt and Income Determination
Fiscal Policy
Determinants of the Level of National Income and Employment
Determination of National Income
Theories of Employment
Theory of International Trade
Balance of Payments
Commercial Policy
Development and Planning Economics
Introduction to Development Economics
Features of Developing Countries
Economic Development and Economic Growth
Theories of Under Development
Theories of Economic Growth
Agriculture and Economic Development
Monetary Economics and Public Finance
History of Money

 

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