Author: luna
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Why does the Monopolist Operate on the Elastic Part of the Demand Curve?
Why does the Monopolist Operate on the Elastic Part of the Demand Curve? A monopolist wishing to maximise profit produces the output up to that amount at which MC = MR. But it is said that no monopolist will ever fix the output for his product at any level where demand for his product is…
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How does a Monopolist Reach Equilibrium?
Perfect competition is compatible only with increasing cost situation, In other words, a perfectly competitive firm reaches equilibrium only when MC is rising. A competitive firm never reaches equilibrium when MC is falling (i.e., when the firm operates under decreasing cost condition) or when MC is constant (i.e., constant cost condition). Thus, perfect competition and…
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In order to attain maximum profit or, in order to be in equilibrium, the following two conditions are to be fulfilled:
Firstly, MC must be equal to MR. This condition is known as necessary condition or first-order condition (FOC) for equilibrium. Secondly, the slope of MC curve must be greater than the slope of MR curve. This condition is called sufficient condition or the second-order condition (SOC) for equilibrium. Only when these two conditions are…
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The following points highlight the eight limits to the power of a monopolist. The limits are: 1. New Entry of Competitors 2. Fear of Substitutes 3. Fear of Public Reactions 4. Fear of Governmental Regulations 5. Consumer’s Surplus of the Commodity 6. Because of the Countervailing Power 7. Fear of Nationalisation 8. Differences in the Elasticities of Demand. Power of a Monopolist # 1. New Entry of Competitors:
New entry of businessmen in the market is rarely barred. Patents, copyrights and government monopolies are possibly the only cases where new competitors cannot come. ADVERTISEMENTS: In other case possibility of competition exists and very high prices will attract new-comers into the field. If dynamic entrepreneurs enter into a monopolized industry, competition may be restored.…
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How does a Monopolist Reach Equilibrium? whether MC is rising or falling or remaining constant, a monopoly reaches equilibrium provided the following two conditions are fulfilled:
Perfect competition is compatible only with increasing cost situation, In other words, a perfectly competitive firm reaches equilibrium only when MC is rising. A competitive firm never reaches equilibrium when MC is falling (i.e., when the firm operates under decreasing cost condition) or when MC is constant (i.e., constant cost condition). Thus, perfect competition and…
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Absolute Control Over Market Supply vs. Absence of Control Over Market Supply:
The following are the main points of distinction between monopoly and perfect competition: ADVERTISEMENTS: 1. One Firm vs. Many Firms: In a monopoly market a single firm produces or sells a particular product. But under perfect competition a large number of firms produce or supply an identical product. 2. Absolute Control Over Market Supply vs.…
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Price-Output Determination in a Multi-Plant Monopoly In this article we will discuss about the price-output determination in a multi-plant monopoly in the long run.
In the long run, a monopoly organisation with a number of plants may increase (or decrease) the number of its plants with a view to obtain the profit-maximising solution. Now, each plant of the monopolist may be of a different size, and in the long run the size of each plant is a variable.…
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Price-Output Determination in a Multi-Plant Monopoly In this article we will discuss about the price-output determination in a multi-plant monopoly in the long run.
In the long run, a monopoly organisation with a number of plants may increase (or decrease) the number of its plants with a view to obtain the profit-maximising solution. Now, each plant of the monopolist may be of a different size, and in the long run the size of each plant is a variable.…
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Why does the Monopolist Operate on the Elastic Part of the Demand Curve?
Get the answer of: Why does the Monopolist Operate on the Elastic Part of the Demand Curve? A monopolist wishing to maximise profit produces the output up to that amount at which MC = MR. But it is said that no monopolist will ever fix the output for his product at any level where demand…
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Exam Question # Q.12. What are the Administrative Problems of State Enterprises?
Ans. Since independence, a large number of State enterprises have been established and the State has been facing the problems relating to their administration. The various experts’ committees that were constituted to advise the government on the management of State enterprises have given divergent and over-contradictory views. Nevertheless, they have thrown some light on the nature…