7. To what extent firm under monopolistic market can influence the price of its product? On w
factor does it depend?
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The extent to which firm under monopolistic market can influence the price of its product:
- In the absence of absolute entry barriers, such as a prohibition on competition or exclusive ownership of all natural resources, completely monopolistic markets are rare and possibly even impossible.
- The monopoly that controls the supply and sets the price of a good or service when they do happen is referred to as the price maker. A monopoly is a profit maximizer because it can increase earnings by altering the supply and price of the commodity or service it offers. The level of output at which the monopoly's profit is maximised can be found by figuring out the point at which its marginal revenue equals its marginal cost.
- Depending on how much its product differs from those of rival companies, the firm will have influence over its price. The firm will have a demand curve that is relatively elastic and will have less control over the price it may charge if its product cannot be distinguished from competing products.
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