Question

Discribe the factor which influences determination of prices under monopoly

Answer 1

Answer:

There are many factors which are responsible for the determination of the price of several products present in monopolies. The most important point which is a cost driver of the product is the availability of products in the market and the rate of consumption of the product.

Explanation:

When any product's price is to be determined then the sales amount have a great influence on determination price of a product. The other major factor is the location where the product is being sold, if the product being sold is in suburban areas, then it is expected to have a lower price.

Answer 2

Explanation:

Price is determined by the demand for the goods when a certain quantity is produced. Because a monopoly’s marginal revenue is always below the demand curve, the price will always be above the marginal cost at equilibrium, providing the firm with an economic profit on the price of the item. Monopolies create prices that are higher, and output that is lower, than perfectly competitive firms. This causes economic inefficiency.