MONOPOLY.pdf

MONOPOLY.pdf

• 1.
  Monopoly Introduction:- A monopolyis a firm that is the sole seller of a product without close substitutes The key difference between monopoly and perfect competition:-A monopoly firm has market power, the ability to influence the market price of the product it sells. A competitive firm has no market power. It’s a price taker.
• 2.
  Features of Monopoly •Single seller • No close substitute • Profit maximiser • Price maker • Firms and industry are same • Barriers to entry of new firms • Price discrimination
• 3.
  Reason why Monopolyexists? • Control over key resources • Economies of scale • Government action :- 1. Govt Monopoly :- An agency under the direct authority of govt itself hold the monopoly 2. Govt granted Monopoly:– govt gives ả private firm right to be a sole provider of a particular product
• 4.
  Price and outputdetermination under monopoly • Equilibrium of firm:- A situation or an output level where a firm gets maximum profit 1.MR=MC 2.MC cuts MR from below
• 5.
  Price and outputdetermination in short run:- short run is a condition or time period where some factors are fixed and some are variable .A producer can’t change the all factors of the production in short run and that’s why he can’t adjust its supply according to the market demand . • Super normal profit:- AR > AC • Normal profit:– AR = AC • Loss:- AR
• 6.
  PRICE DISCRIMINATION Price discriminationis a practice of charging ả different price for the same good. • TYPES OF PRICE DISCRIMINATION 1. First degree price discrimination 2. Second degree price discrimination 3. Third degree price discrimination 4. Personal discrimination 5. Trade discrimination 6. Place discrimination
• 7.
  CONDITION OF PRICEDISCRIMINATION • Monopoly position • Separation of market • Difference in elasticity • Ignorance of consumer