Question

"monopoly firm is a price maker"-explain

Answer 1

A monopoly exists when there is only one producer in the market with a lot of consumers. Monopoly firm is said to be the price maker since there is only one producer so there is lack of competition in market therefore the monopolist sets the price for its product.

It is at the discretion of the monopoly firm whatever price they want to charge they can since there is no available substitute for the good they are producing in the market so consumers have no choice but to purchase it at the monopolist price.

Answer 2

• A monopoly firm is a price-maker simply because the absence of competition from other firms frees the monopoly firm from having to adjust the prices it charges downward in response to the competition. The whole point of a competitive marketplace is that consumers can choose among multiple companies for the same or very similar goods or services.