Define Monopoly.

Solution

Meaning of Monopoly.

Simply put, monopoly is a market in which there is single producer (seller). Mono literally means one, poly implies seller and so 'monopoly' means one seller. Monopoly is a market situation where there is a single firm selling the commodity and there is no close substitute of the commodity sold by the monopolist. It is very difficult for a new firm to enter the monopoly market. Consequently a monopolist is more or less free to charge any price for his product by regulating supply. It is in this sense that seller under monopoly is said to be the price-maker and not a price-taker. Monopoly is opposite of perfectly competitive market. A monopolist's essential advantage is the absence of competitors enabling him to control his supply and thereby obtain highest possible profit. The difference between the monopoly firm and industry disappears since the firm itself constitutes industry due to non-existence of any other firm dealing in the same product. Thus monopoly firm itself is the industry. The demand curve facing a monopoly firm is negatively sloped which means that a monopolist can sell more only at a lower price. Although it is difficult to find a pure monopoly yet Delhi Vidyut Board (now privatised) which supplies electricity in Delhi can be quoted a case of monopoly. Post and Telegraph, issue of currency-notes by Reserve Bank of India are some of other examples of government monopoly

Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

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The Theory Of The Firm Under Perfect Competition

Define Monopoly.

Some More Questions From The Theory Of The Firm Under Perfect Competition Chapter

Define the term market as used in economics.

What is meant by monopolistic competition?

What are selling costs?

Define homogeneous product.

What is meant by differentiated product?

Define perfect competition.

Is the seller under perfect competition a price maker or a price taker?

Define monopoly.

Define market equilibrium.

Can a seller under monopolistic competition influence the price?

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