MONOPOLY BEHAVIOUR

- TO EARN THE HIGHEST PROFIT AS POSSIBLE

Example:

Meralco over the years have had price hikes in their pricing, but this price increase are

minimal and not overly drastic this is because Meralco needs to operate in a price range

in which they earn the highest profit without losing any costumers.

Explanation:

The goal of monopoly is to earn the highest profit as possible since monopoly

means one firm is selling the product it has no competition and the only thing that is

competes is it self. Constraints for firms under monopoly is losing buyers of the product

it sell and this occurs when the firm charges more for its product in which buyers wont

be able to buy which leads to fewer units being sold.

MONOPOLY PRICING OR OUTPUT DECISION

There are two types of price in monopoly Single price and Price discrimination,

Single price means the firm has the same price for each unit output sold while Price

discrimination charges different price for each consumers. Once a firm determine its

output level it also determined its price or vice versa a monopoly has one decision

Example:

Meralco charges the same price per kwh all around the Philippines.
DOWNWARD SLOPING CURVE

- The lower the price the higher the quantity

- Marginal revenue less than the price of output

- Marginal revenue curve lies below the demand curve

Example:

Explanation:

The cause of the downward slope off in monopoly is because the price is lower the

higher the quantity.

PROFIT MAXIMIZATION

- Produce the quantity where MC = MR and the Mc curve crosses the MR curve

from below

- The price is found on the demand curve

EXAMPLE:

EXPLANATION:

To maximize the profit on an monopolist the firm must operate in which the MC curve

crosses MR curve from below because in that price is the highest there will be no loss in

consumer or avoid a higher number of loss

Monopoly:

Is a firm with market power or price setter means that it has the ability to increase its

price without losing all its demand and Monopoly not like other has no competition

giving it the power to set the price not like other competition where they need to adjust

their price in consideration with their competition.