Economy size tooth pastes are relatively cheaper than ordinary-sized tooth pastes. It means expansion in output, the use of Monopoly essays resources of the economy, more employment and income to the community.
Thus when the monopoly firm is in long-run equilibrium, it is also in short- run equilibrium. This consideration may prevent the monopolist from charging too high a price. Firstly, it may be personal based on the income of the customer.
In such a situation, the monopolist would continue to produce so long as he is getting a fair return on his capital investment. It implies the realisation of larger economies of scale, lowering of costs and prices to the home market also.
His price is determined by his demand curve, once he selects his output level. Thus the price of the product is given for the consumer. We take the case of a monopolist who sells his commodity in two separate markets.
Thus he may charge different prices for substantially the same product. In any situation, the ultimate aim of the monopolist is to have maximum profits. Monopoly may arise from a number of sources and is of various types: In Figure 3, the short-run equilibrium of the monopolist Monopoly essays shown when he earns only normal profits.
By levying a lump-sum tax, the government can reduce or even eliminate monopoly profits without affecting either the price or output of the Monopoly essays. The demand for the monopoly product is, therefore, Monopoly essays elastic in the short-run.
Lastly, this measure is based exclusively on demand factors and neglects supply and cost conditions. Thus OF output will be produced for sale in the two markets.
Sometimes transport costs are so high that they act as a safeguard against the return of dumped goods. Pure monopoly like pure competition is unreal. Higher fees are charged to rich persons and lower to the poor.
If, on the other hand, the demand is less elastic, the tendency will be to raise the price and profit more by selling less.
The analysis of the determination of the price, output and profits under monopoly is based on the following assumptions: The most profitable Monopoly essays of output is at the point where the LMC curve intersects the MR curve from below and the SMC curve passes through this point.
But he cannot fix the price and output simultaneously. In the short-run, the monopolist can charge a very high price because customers take time to adjust their habits, tastes and incomes to some other substitutes. The higher the elasticity, lower the monopoly power. The larger the gap between price and marginal cost, the greater is the monopoly power.
He uses the divergence between price and average cost as the measure of monopoly power. This is done when the government appoints a regulating authority or commission which fixes a price for the monopoly product below the monopoly price, thereby increasing output and lowering the price for the consumer.
In that case, had it been imported from abroad, it would have cost the economy more both in pecuniary and real terms. The tax may be levied lump-sum without any regard to the output of the monopolist. Price discrimination of this type proves particularly useful if the industry obeys the law of decreasing costs.
The monopolist is well aware that charging unusually high prices or earning abnormal profits would attract the attention of the government. The difference between price and marginal cost is the measure of the degree of monopoly power. Moreover, Google is essentially a price-maker. TR is the total revenue curve which goes on rising to begin with, then flattens and later on slopes downward, showing fall in total receipts after a given point.
But the manner and extent to which the monopolist will be able to influence price or output will depend upon the elasticity of demand for his product.
It can only be successful if the commodities sold abroad can be prevented from being returned to the home country by tariff restrictions.
If a foreign market is elastic, more will be sold at a lower price. Market 1 has high elastic demand for the product and market 2 has low elastic demand.
Taxation is another way of controlling monopoly power. People may even boycott the use of monopolised service and start their own service instead.
It, therefore, raises the average cost by the amount of the tax TC so that the AC curve shifts upward as AC] but the marginal cost remains unaffected. Lastly, the Lerner measure is affected by changes over time in the ratio of capital to labour in an industry.The Existence of a Monopoly and Public Interest Essay - The Existence of a Monopoly and Public Interest A monopoly is defined as the sole supplier of a good or service with no close substitutes in a given price range.
"Monopoly" refers to a situation where only one company is providing a unique good or service. Because the firm in question is the only place where the good or service can be found, they have the ability to charge whatever they want, to the detriment of market competition that is the foundation of a healthy economy.
- Monopoly The Monopoly a) Using Australian examples describe the characteristics of the two of the following forms: Monopoly Oligopoly The main characteristics of an oligopoly are: · The market is dominated by only a.
But monopoly market’s demand cure is same negatively sloped market demand curve.
If the marginal cost is equal to price, perfect competition market will be equilibrium on that point. But it is different for monopoly market.
Introduction to Monopoly Definition of Monopoly. Monopoly is an industry that has only one firm that sells a good which has no close substitutes. Monopoly firms also represent industries because there are no other firms in the market.
Feb 13, · Words: Length: 2 Pages Document Type: Essay Paper #: MONOPOLY Microeconomics: Monopoly The structure of the markets in which companies operate may vary. The implications of these variations are vital for an understanding of the environment or setting in which a business operates.Download