Explain Monopoly in detail ,Price determination under monopoly?
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PRICE-OUTPUT DETERMINATION UNDER MONOPOLY:
A firm under monopoly faces a downward sloping demand curve or average revenue curve. ... Therefore, the monopolist will be in equilibrium at output OM where marginal revenue is equal to marginal cost and the profits are the greatest.
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In a perfectly competitive market,price equals marginalcost and firms earn an economic profit of zero. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient.
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