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A monopoly is a price maker, not a price taker, meaning that a monopoly has the power to set the market price. [ 14 ] The firm in monopoly is the market as it sets its price based on their circumstances of what best suits them.
A monopoly has considerable although not unlimited market power. A monopoly has the power to set prices or quantities although not both. [37] A monopoly is a price maker. [38] The monopoly is the market [39] and prices are set by the monopolist based on their circumstances and not the interaction of demand and supply. The two primary factors ...
Although raising prices causes the monopoly to lose some business, some sales can be made at higher prices. [1] [4] Although monopolists are constrained by consumer demand, they are not "price takers" because they can influence price through their production decisions.
The emergence of oligopoly market forms is mainly attributed to the monopoly of market competition, i.e., the market monopoly acquired by enterprises through their competitive advantages, and the administrative monopoly due to government regulations, such as when the government grants monopoly power to an enterprise in the industry through laws ...
Firms have partial control over the price as they are not price takers (due to differentiated products) or Price Makers (as there are many buyers and sellers). [5] Oligopoly refers to a market structure where only a small number of firms operate together control the majority of the market share. Firms are neither price takers or makers.
The company is able to collect a price based on the average revenue (AR) curve. The difference between the company's average revenue and average cost, multiplied by the quantity sold (Qs), gives the total profit. A short-run monopolistic competition equilibrium graph has the same properties of a monopoly equilibrium graph.
Thus, as the monopolist raises its price, it sells fewer units. This suggests that when prices rise, even monopolists can drive away customers and sell fewer products. The difference between monopoly and other models is that monopolists can price their products without considering the reactions of other firms' strategic decisions.
Although monopolists are constrained by consumer demand, they are not price takers, but instead either price or quantity setters. Due to the output effect and the price effect, marginal revenue for uncompetitive markets is very different from marginal revenue for competitive firms. [ 13 ]