Economics Stack Exchange
Economics Stack Exchange

Questions tagged [monopoly]

A market structure in which there is a single firm acting as supplier.

158 questions
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Monopoly firm's block pricing strategy making max. profit

I have question about max. profit condition for monopolist block pricing. I learned that to maximize profit in block pricing, given a linear demand curve function and constant MC, calculate $Q_2(Q_1)$, and $P_S(Q_1)$ then find $Q_1$ maximizing…
gungungom
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Will the monopolist inevitably increase the price if demand grows?

Supposing that demand for a product in a monopolised market has grown, is it possible that equilibrium price will go down? In most cases we simply draw curves D, MR, MC and make conclusions. I usually deal with linear demand and constant marginal…
Dahn
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Why do anti-trust regulators in China need to approve NXP's takeover?

Qualcomm is currently awaiting Chinese regulatory approval for its acquisition of rival NXP. Both companies aren't based in China. I'd understand that vehicles like tariffs can be used by countries to exercise control over certain trade inbalances,…
Mussé Redi
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$p(0)\geq c'(0)$ in monopoly

$p(0)\geq c'(0)$ is assumed so that the inverse demand curve originates above the marginal cost curve. But what is the intuition behind this assumption? The highest willing-to-pay consumer is more than the marginal cost of producing the first unit?…
Frank Swanton
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Effect of a subsidy on a monopoly

I'm trying to understand how a subsidy on a monopoly would affect the deadweight loss. I know a subsidy shifts the marginal cost curve downwards, creating a new equilibrium price (price decreases) and quantity (quantity increases), but my question…
Irene Castañeda
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Why is the Marginal Cost (MC) of a monopoly horizontal

I presume it's because they're price makers, but this doesn't really answer much. Furethermore, in a monopoly is it Marginal Cost or Long run marginal cost that's horizontal?
tsp216
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What are examples of natural monopolies that don't have overwhelming economies of scale?

On wikipedia, I read that the currently-used formal definition of a natural monopoly is where “[a]n industry in which multi-firm production is more costly than production by a monopoly”. I tried looking up things related to monopolies and…
B T
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Effect on monopoly price

Suppose a monopolist adopts a technology that allows him to produce his product at lower cost. What is the likely effect on the monopoly price ?
mango
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Is the economic behaviour of a competitive market as a whole the same as a monopoly market?

We know that the price-setting mechanics and individual firm's behaviour in a competitive market are different with those of monopoly powers'. However, the demand curves of both competitive market(as a whole)and monopoly market slope down. So here's…
Guloo
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Consumer Surplus Graph

Question: Draw a monopoly graph, with upward sloping marginal cost and on the graph label the area that would be consumer surplus if price were equal to marginal cost, but is producer surplus under monopoly. Answer: Confusion: I have trouble…
IWantToLearn
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What is the difference between monopoly profit and monopoly rent?

I understand that monopoly profit is the return on capital (=profit) of the monopolist, which is larger than the normal profit in a competitive market. As monopoly rent I understand the income in excess of the factor cost (=rent) of the…
sba222
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Profit Maximisation for a Monopolist

Suppose a monopolist faces the following inverse demand function : $p = exp(-Q)$ The monopolist can produce any positive level of output with zero variable cost. Its fixed cost is $F$. Find the profit-maximising output for two cases (i) when $F =…
Dr. Dre
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Doubt on Calculation of MR

So this is very beginner level doubt. I know $ MR = \frac{\partial TR}{\partial q} $ . So TR need to be in terms of q to differentiate. This helps us to find Optimal Output level in Monopoly by equating $MR=MC$ But can $ MR = \frac{\partial…
Joa
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Why is economic profit for a monopoly per unit demand minus ATC?

I understand that the P-ATC gives the per unit economic profit Why is this the case? Why wouldn't we take price minus the marginal cost?
Christopher U
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Monopoly's MC, AVC and TVC

I do not quite understand the statement "total variable cost is the area under the marginal cost curve" Does it means MC inserts at the AVC at the lowest point (see picture)? But why AVC is drawn and not TVC?
Cynthia
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