established rivals and new firms would lure customers away with slightly different and/or cheaper products
A monopolist has to lower its quantity relative to the competitive market to maximize profits because the monopolist is already in control of the biggest part of the market. This means that because they're already in control, to keep the market competitive they need to release the same amount of product as their competition.
A monopolist must lower its quantity relative to a competitive market to maximize its profits because the monopolist already controls and owns the largest share of the market.
If a monopolist raises his prices above marginal cost, he will increase his profits. This seems like a good thing for the monopolist. However, the down side is that it reduces the well-being of consumers. Most times, the harm to consumers is greater than the gain of the monopolist.
marginal revenue
marginal revenue
A perfectly competitive firm maximizes profit in the short run by producing the quantity where marginal cost equals marginal revenue. In the short run, firms can make profits due to price fluctuations and temporary market conditions, but in the long run, new firms can easily enter the market, increasing competition and driving down prices to the point where economic profits are reduced to zero.
Firms try to avoid competition so that they can set higher profits and earn greater profits.
Because of the recession, overhead, and competition.
It is not certain that anyone's profits will eventually be eliminated by competition; it is in the nature of competition that you have a chance of winning, as well as a chance of losing. And lots of people enjoy competition.
by eliminating competition to control prices
No. It depends on the monopolistic firm. If the firm is a monopolist because it has lowered its prices on products so low to drain out the competition and force the other firms to exit the market, it may not be profiting at all and it may be losing money instead. However, in the long run a monopolistic firm can be profitable because when all firms exit the market it has the ability to raise prices to pay for any loss it may have experienced by lowering prices in the earlier part of its monopolistic strategy. A firm that is a monopolist in a market may never see profitability. It all depends on the monopolist's ability to defend its product that it takes to market. Also, a firm isn't ever guaranteed positive economic profit. The demand might cease at any time and the firm might find itself in a never ending loss scenerio.
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more. Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)