Economics is an interesting and exciting field of study, but students sometimes get stuck with basic topics such as monopoly in economics. So be it any other type of monopoly, oligopoly, monopolistic competition, demand and supply of a product and so on, our subject matter experts are PhD holders and they know how to craft that stellar HI5003 – Economics for Business & Assessment Solutions. In case you would like to go ahead all by yourself, no worries, I would still like to help you. So, let’s discuss the basic topic of monopoly in economics. Let’s begin.
“Market form in which a single producer controls the whole supply of a single commodity which has no close substitutes.”
As an economics student, you all might know a monopoly is a term used for those firms who have a strong foothold as a sole seller of a particular product that it deals in as well as where there are no close substitutes available. It is also to be noted here that an unfettered monopoly boasts of market power and can also influence prices. For instance, Microsoft and Windows, DeBeers and diamonds etc.
Now, the question arises as to why monopolies arise in the market? It does so because of the following factors:
To get clarity as to how the monopoly revenue is calculated, consider the below-mentioned table:
Average profits are equal to the expense for any S, AP = P×S/S, but peripheral profit is less than the price. Peripheral profits, ªTR/ªS, can even be negative.
When output upsurges, there are two effects on profits, P×S.
If the cost did not change as a consequence of the increased amount, we would only have a quantity consequence, and peripheral profit or marginal revenue would be the same as the cost. For a price taker, there is no price effect, so MR = P. For a monopoly, MR < P
What are the 4 types of monopolies?
Below are the 4 types of monopoly:
Oligopoly is a market or an industry subjugated by a minor set of big vendors. Four features of oligopoly commerce are as follows:
Below are some of the examples of oligopoly industries:
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