what is monopoly explain with its features
Market structure where there is a single seller or firm that caters to the needs of large number of buyers.
- Single seller: A single seller sells the product in the market hence the firm and industry are one and the same. Firm will be having control over production and control over supply of output. However, there are large number of buyers in the market and a single buyer cannot influence the market price.
- No close substitutes: A product produced by the firm has no close substitutes. There is no fear of competition from new or existing products.
- Restricted entry of new firms: There is a barrier to the entry of new firms because of legal restrictions such as licensing, patents and pertaining to cartels. So they earn abnormal profit or loss in the long run.
- Price maker: A monopolist has full control over price. Being a single seller of the product in the market, she/he can fix whatever price she/he wishes to fix for her/his product. Competition does not prevail in this kind of market. Because there are no close substitutes of the monopoly product, there will not be any shift in consumer preferences from one product to the other. The market supply will not increase as there is no entry and exit of new firms.
- Price discrimination: Monopolist charged different prices for the same product from different customers.
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