Question

Monopolies are classified as a price maker. Monopolies will not have a lot of competition in their market structures. How do you think the lack of competition will impact how monopolies will operate? If you were a manager, in charge of a monopoly, how would you figure out what to charge for your good/service that you are selling? This assignment will require 3-5 paragraphs.

Answer 1

Due to lack of competition under monopoly, its potential to raise price indefinitely is most critical factors for consumers. Since there is no competition , therefore price charged by monopoly firm is the market price and demand created is the market demand. Even when they charge High priced consumers have no option than to buy the product as there are no substitutes for the product.

As they are the one supplier, they can also refuse to sell the product to consumers , they can also refuse to sell the goods to company which is important for them and they have the potential to indirectly shut down that Business. Natural monopolies which are owned by non profits organisation and local government can even low price for the goods to serve the majority of consumers.

If I were a manager incharge of monopoly firm my goal will be to maximise the profit by developing the pricing strategy. By looking at the demand for that particular goods and services, price for that goods will be charged.

In monopoly price is charged to highest possible price that can be charged and then too goods be able to sell which are manufactured. For this purpose it is very important to determime the exact level of output and then price should be charged