0
The answer to your question is quite complex, but in a very basic sense a monopoly faces no competitive constraints in the market. Under pure competition a firm can only charge the price that consumers are willing to pay. If you and I both own perfectly competitive coffee shops and I charge $1 for a cup of coffee while you are charging $2, the number of cups of coffee demanded at your shop will decrease while mine increases. I'll increase my supply as a result, and wind up raking in the cash. This will mean that you make a lot less money, and eventually you will have to change your price in order to make profits. In other words, you must TAKE the price that consumers are willing to pay, or they'll just go to other places. On the other hand, if you own the only coffee shop on the planet, you could charge whatever price you like since you control supply. No other firm can pop up and supply coffee at a lower price than yours because all of the coffee in the world comes from you. The bottom line is: a monopolist can set the industry supply curve wherever they please since they control all output, which means supply will intersect demand wherever the monopolist wants it to (which will be at the quantity where marginal revenue equals marginal cost, but that's a different story). This is by no means a complete answer, but I hope it helps.
What else can I help you with?
What is the Price elasticity of demand in each of the four market structures - perfect competition monopoly monopolistic competition and oligopoly?
Perfect competition is perfectly elastic (taken from my Economics textbook)...still searching on the other three.
A perfectly competitive firm will produce more output and change a lower price than a single price monopoly firm. Do you agree or disagree with this statement?
I agree with the statement. A perfectly competitive firm operates where price equals marginal cost, leading to an efficient allocation of resources and typically resulting in a higher output at a lower price than a monopoly. In contrast, a single-price monopoly maximizes profit by producing less output and charging a higher price, leading to decreased consumer surplus and potential market inefficiencies. Thus, perfect competition generally results in greater output and lower prices compared to monopoly scenarios.
why is pure competition better compared to monopoly?
Yes, perfect competition allows the market to dictate prices where as a monopoly can set any price because there is no other alternative.
Why is Perfect Competition as a model better for society than unregulated Monopoly?
Perfect competition allows for fairer price structures than those that would likely be seen in a monopoly.
Distinguish perfect competition and imperfect competition?
In imperfect competition the producer is the price maker. Whereas in perfect the producer is the price taker meaning there are many producers and no one can influence the price.
What is the Price elasticity of demand in each of the four market structures - perfect competition monopoly monopolistic competition and oligopoly?
Perfect competition is perfectly elastic (taken from my Economics textbook)...still searching on the other three.
What is the Price elasticity of demand in each of the four market structures perfect competition monopoly monopolistic competition and oligopoly?
Perfect competition is perfectly elastic (taken from my Economics textbook)...still searching on the other three.
How does monopoly control the price of its product?
faces a demand curve that is inelastic throughout the range of market demand. faces a perfectly inelastic demand curve. is a price maker. is also able to dictate the quantity purchased
A perfectly competitive firm will produce more output and change a lower price than a single price monopoly firm. Do you agree or disagree with this statement?
I agree with the statement. A perfectly competitive firm operates where price equals marginal cost, leading to an efficient allocation of resources and typically resulting in a higher output at a lower price than a monopoly. In contrast, a single-price monopoly maximizes profit by producing less output and charging a higher price, leading to decreased consumer surplus and potential market inefficiencies. Thus, perfect competition generally results in greater output and lower prices compared to monopoly scenarios.
why is pure competition better compared to monopoly?
Yes, perfect competition allows the market to dictate prices where as a monopoly can set any price because there is no other alternative.
Why is Perfect Competition as a model better for society than unregulated Monopoly?
Perfect competition allows for fairer price structures than those that would likely be seen in a monopoly.
what is the differences between Perfect Competition and Monopoly Market?
The difference between a monopoly market and a perfectly competitive market is that in a perfectly competitive market there are many sellers and buyers, the traded goods are homogeneous goods or the same goods and sellers are not free to set prices. whereas, a monopoly market is a market that has only one seller, so buyers have no other choice and sellers have a large influence on price changes.
Is it a good policy for governments to completely eliminate monopoly power?
no monopoly is better in some organizations because i it gives economy of scale and its gives better services because of its large scale business but monopolistic competition is better than monopoly because in monopolistic competition , organization has discretionary power on either quantity or price but in monopoly organization have more control on price or supply than monopolistic competition and can charge price of its own will.
Distinguish perfect competition and imperfect competition?
In imperfect competition the producer is the price maker. Whereas in perfect the producer is the price taker meaning there are many producers and no one can influence the price.
What happens to price when there is a monopoly?
When there is a monopoly, the general direction of prices is upward. Because of no competition, buyers have no other choice from where to purchase the products. The monopoly company is then free to raise prices at will.
What happens to price when there is monopoly?
When there is a monopoly, the general direction of prices is upward. Because of no competition, buyers have no other choice from where to purchase the products. The monopoly company is then free to raise prices at will.
How much control does monopolist have over pricing?
Total control, as there is no competition the monopoly vendor can ask any price they wish. That is why monopolies are bad for society and Governments have to intervene in the capitalistic market.
