Thursday, 7 November 2019

Unit 10: Imperfect Competition – Monopoly

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                              Unit 10: Imperfect Competition – Monopoly    



In the case of monopoly one firm constitutes the whole industry.

There must be a single producer or seller of a product and the product has no close substitute.

In the short run the monopolist maximises his short run profits or minimises his short run losses if the following two conditions are satisfied:   (i) MC = MR and (ii) The slope of MC is greater than the slope of MR at the point of their intersection.

In the long run, the monopolist has the time to expand his plant or to intensively use his existing plant which will maximise his profits.

A seller indulges in price discrimination when he sells the same product at different prices to different buyers.

A monopolist firm sells a single product in two different markets either different elasticities of demand.

Dumping: When the firm is a monopolistic in the domestic market but faces perfect competition in the world market.

Equilibrium: Condition when the firm has no tendency either to increase or to contract its output.

Imperfect competition: A market structure wherein individual firms exercise control over the price to a smaller or larger degree depending upon the degree of imperfection present in a case.

Market period: A very short period in which the supply is fixed, that is no adjustment can take place in supply conditions.

Monopoly: Existence of a single producer or seller which is producing or selling a product which has no close substitutes.

Perfect competition: A market structure characterized by a complete absence of rivalry among the individual firms.

Profit: Difference between total revenue and total cost.





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