![]() ![]() ![]() To induce consumers to buy more of the same product, the market price must be reduced.Ĭontradiction between the law of demand and the situation of the competitive firm resolved in fig no -1. People are not willing to buy unlimited quantities at the prevailing market rate. You also noted earlier that firms under perfect competition do not violate the law of demand. Hence each individual firm effectively confronted a horizontal demand curve explain in part A of the fig 1. A competitive can sell its entire output at the prevailing market price. Just as perfect competition is rare, in less regulated market economies.įig no-1 illustrates the distinction between perfectly competitive and imperfectly competitive firm. It exists when just one firm is the sole producer of a product which has no close substitutes. If perfect competition is one extreme of the market structure, the other end is characterised by monopoly. In other words ,a monopolist faces a downward sloping demand curve. Sales volume may reduce when price increases but cannot drop to zero. Monopolist can alter the price of their output without losing all their customers. It would lose all its customers if tried to charge a higher price. Each producer could sell all it wanted at the prevailing price. In case of perfect competition many firms were producing and selling the same good, each firm has to act as a price taker. The essence of monopoly power is the ability to alter the price of a product. Monopolist can fix the price as well as quantity output to be sold in the market to get maximum revenue from his sales proceeds Profit maximization –The firm attempts to maximise his profit. There are entry barriers – Monopoly power to a firm with respect to natural resources, technical knowledge, exclusive ownership of raw-materials,business reputation etc may block the entry of new firms. Monopolist can increase his sale by reducing price of his product. There is no separate concept of firm and industry- Monopolist faces downward sloping demand curve for its product. There is a single ruling price which can be differentiated by the producer. ![]() Monopolist can vary the price from buyer to buyer. Price-maker- Monopolist can change the price for his product. Under monopoly firm and industry are identical. there are no close substitutes for its product. No close substitutes available – The entire market supply is controlled by a single producer in the market. Single seller –There is only one seller or firm in the market facing many buyers. Prepare yourself for discussing pricing practices and methods. Question the profit maximising principle and its relevance in practice. 4.ĝiscover the situation of market disequilibrium in some cases.3.Ěnalyse the price output decision undertaken by a single seller.2.Ěppreciate the real world market situation in terms of an analytical framework.Identify a variety of market where small sellers dominate. Pricing strategy plays an important role in many business decisions.Īfter reading this chapter, you are expected to learn about: A study of these situation would help us in appreciating the reality around us, particularly the present status of monopoly regulation in the country. ![]() In this chapter we study how a market controlled by just one firm –a monopoly. Imperfect market may assume a variety of forms like monopoly, monopsony, duopsony,oligopoly and bilateral monopoly. In this unit we examine how market structure influences market outcomes. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |