What is net monopoly revenue
Answers
Answer:
Monopoly : There are different types of markets in an economy, perfect competition, monopoly, monopolistic competition, and oligopoly. In this article, we will look at monopoly definition and features along with the revenue curves under monopoly.
Explanation:
Monopoly Definition : The term monopoly means a single seller (mono = single and poly = seller). In economics, a monopoly refers to a firm which has a product without any substitute in the market. Therefore, for all practical purposes, it is a single-firm industry.
Revenue curves under a Monopoly : A monopolistic firm is a price-maker, not a price-taker. Therefore, a monopolist can increase or decrease the price. Also, when the price changes, the average revenue, and marginal revenue changes too.
The existing buyers to purchase more
New buyers to enter the market
Hence, the demand conditions for his product are different than those in a competitive market. In fact, the monopolist faces demand conditions similar to the industry as a whole.
Therefore, he faces a negatively sloped demand curve for his product. In the long-run, the demand curve can shift in its slope as well as location. Unfortunately, there is no theoretical basis for determining the direction and extent of this shift.
Talking about the cost of production, a monopolist faces similar conditions that a single firm faces in a competitive market. He is not the sole buyer of the inputs but only one of the many in the market. Therefore, he has no control over the prices of the inputs that he uses.