Features (characteristics) of monopoly market structure
- Entry to the market by other firms is blocked both in the short and long run.
- Firms aim at profit maximization and therefore produce at a point where MC = MR.
- There is only one seller of a commodity which has no dose substitutes or no substitutes at all.
- The firm under monopoly is the price maker, that is, it has the ability to determine the price of its own commodity.
- The monopolist produces of excess capacity both in the short and long run. This is because he has the ability to restrict output and charge a high price.
- The demand curve under monopoly is inelastic and downward sloping from left to right.
- The monopolist earns abnormal profits both ill the short and long run. This is because he has the ability to restrict output and charge high price for his commodity
- The monopolist carries out informative advertisement just to inform his customers about the availability of his product on the market. This is because the monopolist has no competitors.
CATEGORIES Economics
TAGS Dr. Bbosa Science
