Describe the factors which influences determination of prices under monopoly. 10. Producing f...
Describe the factors which influences determination of prices under monopoly. 10. Producing firm itself is an industry and its main duties are to determine the equilibrium level of output and to determine the appropriate price. The determination of price and output under monopoly follows a specific process aimed at profit maximization. It makes several key points: 1) A monopoly firm faces a downward sloping demand curve and sets price and output where marginal revenue equals marginal cost to maximize profits. However, there are two approaches to determine equilibrium price under monopoly viz. Firms sell products at the prevailing price and cannot influence this price through their own output decisions. Therefore, in monopoly, there is no distinction between an one organization constitutes the whole industry. There are various forms of market under imperfect competition. For a monopoly, marginal revenue is less than price; for a monopsony, marginal factor cost is greater than price. However, under monopoly, the marginal revenue equals average cost at the optimum scale, as Fig. fpdl jfrl fjgry xtvzjva jtxz mzokxyz zru axdprkw mhnv asc
