{"id":4060,"date":"2020-03-24T06:10:44","date_gmt":"2020-03-24T06:10:44","guid":{"rendered":"https:\/\/commerceiets.com\/?p=4060"},"modified":"2020-03-24T06:10:44","modified_gmt":"2020-03-24T06:10:44","slug":"monopoly-meaning","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/monopoly-meaning\/","title":{"rendered":"MONOPOLY MEANING"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_69_1 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#MONOPOLY_MEANING\" title=\"MONOPOLY MEANING\">MONOPOLY MEANING<\/a><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><ul class='ez-toc-list-level-5' ><li class='ez-toc-heading-level-5'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#In_this_post_you_will_get_notes_on_Monopoly_Meaning_Features_of_Monopoly_and_price_determination_under_monopoly\" title=\"In this post you will get notes on Monopoly Meaning, Features of Monopoly and price determination under monopoly.\">In this post you will get notes on Monopoly Meaning, Features of Monopoly and price determination under monopoly.<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#FEATURES_OF_MONOPOLY\" title=\"FEATURES OF MONOPOLY\">FEATURES OF MONOPOLY<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#One_Seller_and_Large_Number_of_Buyers\" title=\"One Seller and Large Number of Buyers\">One Seller and Large Number of Buyers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#No_Close_Substitutes\" title=\"No Close Substitutes\">No Close Substitutes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#Difficulty_of_Entry_of_New_Firms\" title=\"Difficulty of Entry of New Firms\">Difficulty of Entry of New Firms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#Monopoly_is_also_an_Industry\" title=\"Monopoly is also an Industry\">Monopoly is also an Industry<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#Price_Maker\" title=\"Price Maker\">Price Maker<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#Nature_of_Demand_and_Revenue_under_Monopoly\" title=\"Nature of Demand and Revenue under Monopoly\">Nature of Demand and Revenue under Monopoly<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#PRICE_AND_OUTPUT_DETERMINATION_UNDER_MONOPOLY_SHORT_RUN\" title=\"PRICE\nAND OUTPUT DETERMINATION UNDER MONOPOLY: SHORT RUN\">PRICE\nAND OUTPUT DETERMINATION UNDER MONOPOLY: SHORT RUN<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/commerceiets.com\/monopoly-meaning\/#PRICE_AND_OUTPUT_DETERMINATION_UNDER_LONG-RUN\" title=\"PRICE AND OUTPUT DETERMINATION UNDER LONG-RUN\">PRICE AND OUTPUT DETERMINATION UNDER LONG-RUN<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\" id=\"monopoly-meaning\"><span class=\"ez-toc-section\" id=\"MONOPOLY_MEANING\"><\/span><strong>MONOPOLY MEANING<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"in-this-post-you-will-get-notes-on-monopoly-meaning-features-of-monopoly-and-price-determination-under-monopoly\"><span class=\"ez-toc-section\" id=\"In_this_post_you_will_get_notes_on_Monopoly_Meaning_Features_of_Monopoly_and_price_determination_under_monopoly\"><\/span>In this post you will get notes on Monopoly Meaning, Features of Monopoly and price determination under monopoly.<span class=\"ez-toc-section-end\"><\/span><\/h5>\n\n\n\n<p>The word Monopoly Meaning is the derivation from the combination of two words i.e., \u2018Mono\u2019 and \u2018Poly\u2019. Mono refers to a single and poly to control.<\/p>\n\n\n\n<p>In this way, monopoly refers to a market situation in\nwhich there is only one seller of a commodity.<\/p>\n\n\n\n<p>There are no close substitutes for the commodity it\nproduces and there are barriers to entry. The single producer may be in the\nform of individual owner or a single partnership or a joint stock company. In\nother words, under monopoly there is no difference between firm and industry.<\/p>\n\n\n\n<p>Monopolist has full control over the supply of commodity. Having control over the supply of the commodity he possesses the market power to set the price. Thus, as a single seller, monopolist may be a king without a crown. If there is to be monopoly, the cross <a href=\"https:\/\/commerceiets.com\/elasticity-of-demand\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"elasticity of demand (opens in a new tab)\">elasticity of demand<\/a> between the product of the monopolist and the product of any other seller must be very small.<\/p>\n\n\n\n<p><strong>ACCORDING\nTO BILAS<\/strong><strong><\/strong><\/p>\n\n\n\n<p>\u201cPure monopoly is represented by a market\nsituation in which there is a single seller of a product for which there are no\nsubstitutes; this single seller is unaffected by and does not affect the prices\nand outputs of other products sold in the economy.\u201d <\/p>\n\n\n\n<p><strong>ACCORDING\nTO KOUTSOYIANNIS<\/strong><\/p>\n\n\n\n<p>\u201cMonopoly is a market situation in which\nthere is a single seller. There are no close substitutes of the commodity it\nproduces, there are barriers to entry\u201d. <\/p>\n\n\n\n<p><strong>ACCORDING TO A J BRAFF<\/strong><\/p>\n\n\n\n<p>\u201cUnder pure monopoly there is a single seller in the\nmarket. The monopolist demand is market demand. The monopolist is a\nprice-maker. Pure monopoly suggests no substitute situation\u201d. <\/p>\n\n\n\n<p><strong>ACCORDING TO FERGUSON<\/strong><\/p>\n\n\n\n<p>\u201cA pure monopoly exists when there is only one producer\nin the market. There are no other competitions.\u201d <\/p>\n\n\n\n<p><strong>ACCORDING TO MC CONNEL<\/strong><\/p>\n\n\n\n<p>\u201cPure or absolute monopoly exists when a single firm is\nthe sole producer for a product for which there are no close substitutes.\u201d <\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"features-of-monopoly\"><span class=\"ez-toc-section\" id=\"FEATURES_OF_MONOPOLY\"><\/span><strong>FEATURES OF MONOPOLY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The features of monopoly are as\nfollows:<\/strong><\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"one-seller-and-large-number-of-buyers\"><span class=\"ez-toc-section\" id=\"One_Seller_and_Large_Number_of_Buyers\"><\/span><strong>One Seller and Large Number of Buyers<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The monopolist\u2019s firm is the only firm; it is an\nindustry. But the number of buyers is assumed to be large.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"no-close-substitutes\"><span class=\"ez-toc-section\" id=\"No_Close_Substitutes\"><\/span><strong>No Close Substitutes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There shall not be any close substitutes for the product\nsold by the monopolist. The cross elasticity of demand between the product of\nthe monopolist and others must be negligible or zero.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"difficulty-of-entry-of-new-firms\"><span class=\"ez-toc-section\" id=\"Difficulty_of_Entry_of_New_Firms\"><\/span><strong>Difficulty of Entry of New Firms<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>There are either natural or artificial restrictions on\nthe entry of firms into the industry, even when the firm is making abnormal\nprofits.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"monopoly-is-also-an-industry\"><span class=\"ez-toc-section\" id=\"Monopoly_is_also_an_Industry\"><\/span><strong>Monopoly is also an Industry<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Under monopoly there is only one firm which constitutes\nthe industry. Difference between firm and industry comes to an end.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"price-maker\"><span class=\"ez-toc-section\" id=\"Price_Maker\"><\/span><strong>Price Maker<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Under monopoly, monopolist has full control over the\nsupply of the commodity. But due to large number of buyers, demand of any one\nbuyer constitutes an infinitely small part of the total demand. Therefore,\nbuyers have to pay the price fixed by the monopolist.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"nature-of-demand-and-revenue-under-monopoly\"><span class=\"ez-toc-section\" id=\"Nature_of_Demand_and_Revenue_under_Monopoly\"><\/span><strong>Nature of Demand and Revenue under Monopoly<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Under monopoly, it becomes essential to understand the nature of <a href=\"https:\/\/commerceiets.com\/demand\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"demand (opens in a new tab)\">demand<\/a> curve facing a monopolist. In a monopoly situation, there is no difference between firm and industry. Therefore, under monopoly, firm\u2019s demand curve constitutes the industry\u2019s demand curve. Since the demand curve of the consumer slopes downward from left to right, the monopolist faces a downward sloping demand curve. It means, if the monopolist reduces the price of the product, demand of that product will increase and vice- versa. <\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"250\" height=\"211\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-62.png\" alt=\"REVENUE CURVE UNDER MONOPOLY MEANING\" class=\"wp-image-4062\"\/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p>In the diagram above, Average revenue curve of the monopolist slopes downward from left to right. Marginal revenue (MR) also falls and slopes downward from left to right. MR curve is below AR curve showing that at OQ output, <a href=\"https:\/\/commerceiets.com\/revenue\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"average revenue (opens in a new tab)\">average revenue<\/a> (= Price) is PQ where as marginal revenue is MQ. That way AR &gt; MR or PQ &gt; MQ.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"price-and-output-determination-under-monopoly-short-run\"><span class=\"ez-toc-section\" id=\"PRICE_AND_OUTPUT_DETERMINATION_UNDER_MONOPOLY_SHORT_RUN\"><\/span><strong>PRICE\nAND OUTPUT DETERMINATION UNDER MONOPOLY: SHORT RUN<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the short run, a monopolist\nhas to work with a given existing plant. He can expand or contract output by\nvarying the amount of variable factors. He cannot adjust the size of plant in\nthe short run.<\/p>\n\n\n\n<p><strong>A monopolist in equilibrium may face three situations in the short run:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"611\" height=\"257\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-63.png\" alt=\"RETURNS IN SHORT RUN EQUILIBIRIUM IN MONOPOLY\" class=\"wp-image-4063\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-63.png 611w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-63-300x126.png 300w\" sizes=\"(max-width: 611px) 100vw, 611px\" \/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p>The process of price\ndetermination under monopoly has been explained as follows:<\/p>\n\n\n\n<p><strong>1. Super Normal Profit:<\/strong><\/p>\n\n\n\n<p>If the average revenue (AR) fixed by monopolist in equilibrium is more than the <a href=\"https:\/\/commerceiets.com\/concept-of-costs\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"average cost (AC) (opens in a new tab)\">average cost (AC)<\/a> than monopolist will earn excess profits.<\/p>\n\n\n\n<p>The revenue and cost conditions faced by monopolist firm are presented in the following figure:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"307\" height=\"268\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-64.png\" alt=\"SUPER NORMAL PROFIT\" class=\"wp-image-4064\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-64.png 307w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-64-300x262.png 300w\" sizes=\"(max-width: 307px) 100vw, 307px\" \/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p>AR and MR are the average and marginal revenue curves of the firm, respectively. <a href=\"https:\/\/commerceiets.com\/traditional-theory-of-cost\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"SAC and SMC (opens in a new tab)\">SAC and SMC<\/a> are the short run average cost and marginal cost curves of the firm, respectively. To maximise profits, the monopolist firm chooses a price and output combination for which SMC = MR, and SMC curve cuts MR from below.<\/p>\n\n\n\n<p>As shown in the Figure, E is the\nequilibrium where monopolist SMC curve cuts MR curve from below. A\nperpendicular parallel to y-axis is drawn at point E connecting the x-axis at Q\nand the demand curve at A. OQ is the equilibrium output. AQ is the equilibrium\nprice, because the price is determined by demand curve or average revenue\ncurve.<\/p>\n\n\n\n<p>The average\ncost is BQ, because line AQ cuts SAC curve at point B. Thus, the monopolist\u2019s\nper unit excess profit is AB, which is the difference between the price (AQ)\nand the corresponding average cost of production (BQ) The ABPP<sub>1<\/sub>&nbsp;represent total monopolist\u2019s profit. The total\nprofit of the monopolist will be maximum only at OQ level of output.<\/p>\n\n\n\n<p><strong>2. Normal Profit:<\/strong><\/p>\n\n\n\n<p>In the short period, it is possible that monopolist may earn normal profit. This happens only when the average cost curve of the monopolist is tangent to its average revenue curve.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"257\" height=\"228\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-65.png\" alt=\"NORMAL PROFIT\" class=\"wp-image-4065\"\/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p>In following figure, the monopolist is the\nequilibrium at OQ level of output, because at this level of output his marginal\ncost curve (SMC) cuts MR curve at point E. Also at same level of output (OQ)\nthe monopolist SAC curve touches his AR curve at point A. Thus AQ or OP is the\nmonopolist price (which is determined by AR curve) is also equal to the cost\nper unit (AQ). The monopolist will earn only normal profit and the normal\nprofit is included in the average cost of production.<\/p>\n\n\n\n<p><strong>3. Loss Minimization in the\nShort Period:<\/strong><\/p>\n\n\n\n<p>In the short run, the monopolist may incur losses also. The monopolist may continue his production so long as price of his product is high enough to cover his average variable cost. If the price falls below average variable cost, the monopolist prefers to stop production. Accordingly, a monopolist in equilibrium, in the short run, may bear minimum losses equivalent to fixed costs. The situation of minimum losses has been illustrated in the following figure:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-66-1.png\" alt=\"LOSS IN SHORT PERIOD\" class=\"wp-image-4066\"\/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p>The monopolist is in equilibrium at point E,\nwhere SMC = MR and SMC curve cuts MR curve below. 0Q is the equilibrium level\nof output.<\/p>\n\n\n\n<p>The price of equilibrium output 0Q is fixed\nat BQ or 0P.<\/p>\n\n\n\n<p>At this price, average variable cost (AVC)\ncurve AR curve at point B. It means firm will set at only average variable cost\nfrom the prevailing price. The firm will bear the loss of fixed cost equivalent\nto AB per unit. The firm will bear total loss equivalent to ABPP<sub>1<\/sub>. If its price falls below (BQ) the monopolist will\nprefer to stop the production. The point B is also known as \u2018shut-down point\u2019.<\/p>\n\n\n\n<p>From the above analysis of short\nrun price and output equilibrium it may be content that profit maximisation or\nloss minimisation or attainment of normal profit will be accomplished only at\nthat level of output at which marginal cost is equal to marginal revenue and\nmarginal cost cuts MR curve from below.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"price-and-output-determination-under-long-run\"><span class=\"ez-toc-section\" id=\"PRICE_AND_OUTPUT_DETERMINATION_UNDER_LONG-RUN\"><\/span><strong>PRICE AND OUTPUT DETERMINATION UNDER LONG-RUN<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the long run, the monopolist\nhas the time to expand its size of the plant, or to use his existing plant at\nany level which will maximize his profit. With entry blocked, however, it is\nnot necessary for the monopolist to reach an optimal scale, what is certain is\nthat the monopolist will not stay in business, if he makes losses in the long\nrun.<\/p>\n\n\n\n<p>However, the size of his plant\nand the degree of utilization of any given plant size depends entirely on the\nmarket demand. After these adjustments are completed, the monopoly rum will\nhave a long run equilibrium determined by the equality of long run marginal\ncost and marginal revenue as shown in following figure:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"287\" height=\"250\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-67.png\" alt=\"LONG RUN EQUILIBRIUM IN MONOPOLY\" class=\"wp-image-4067\"\/><figcaption><strong>MONOPOLY MEANING<\/strong><\/figcaption><\/figure>\n\n\n\n<p><a href=\"http:\/\/www.microeconomicsnotes.com\/wp-content\/uploads\/2018\/09\/clip_image010_thumb_thumb_thumb_thumb_thumb.jpg\" target=\"_blank\" rel=\"noopener\"><\/a><\/p>\n\n\n\n<p>E is the equilibrium point of the monopolist\nfirm. Corresponding to this equilibrium point, 0Q is the equilibrium level of\noutput. The monopoly will fix price AQ in the long run. Average cost is BQ.\nProfit per unit is AB. Total profit is equal to ABPP<sub>1<\/sub>.<\/p>\n\n\n\n<p>It may be noted that there is always a tendency for the monopolist firm to secure excess profits, even in the long run, since entry into the industry is prohibited.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/demand\/\">Theory of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-demand\/\">Law of Demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/demand-function\/\">Demand Function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/exceptions-of-law-of-demand\/\">Exceptions of law of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/elasticity-of-demand\/\">Elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/change-in-demand\/\">Change in demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/price-elasticity-of-demand\/\">Price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-law-of-demand-and-elasticity-of-demand\/\">Law of demand Vs Elasticity of demand<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/factors-affecting-price-elasticity-of-demand\/\">Factors affecting price elasticity of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/production-function\/\">Production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-short-run-long-run-production-function\/\">Short run vs long run production function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-variable-proportions\/\">Law of variable proportions<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/types-of-demand\/\">Types of demand<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/managerial-economics\/\">Managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/characteristics-of-managerial-economics\/\">Characteristics of managerial economics<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-managerial-economics\/\">Scope of managerial economics<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/utility-analysis\/\">Utility analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-marginal-utility\/\">Law of diminishing marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-equi-marginal-utility\/\">Law of equi marginal utility<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium\/\">Consumers Equilibrium<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/indifference-curve-analysis\/\">Indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/consumer-equilibrium-using-indifference-curve-analysis\/\">Consumer equilibrium using indifference curve analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-tp-ap-and-mp\/\">Relationship between TP, AP and MP<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-increasing-returns\/\">Law of increasing returns<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/law-of-diminishing-returns\/\">Law of diminishing returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/law-of-constant-returns\/\">Law of constant returns<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/returns-to-scale\/\">Returns to Scale<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/economies-and-diseconomies-of-scale\/\">Economies and diseconomies of scale<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/concept-of-costs\/\">Concept of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/relationship-between-ac-and-mc\/\">Relationship between AC and MC<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/traditional-theory-of-cost\/\">Traditional theory of costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/modern-theory-of-cost\/\">Modern theory of costs<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explicit-vs-implicit-costs\/\">Explicit vs Implicit costs<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/revenue\/\">Revenue<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-competition\/\">Perfect competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-meaning\/\">Monopoly<\/a>&nbsp;<\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/price-discrimination\/\">Price discrimination<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-perfect-competition-and-monopoly\/\">Difference between perfect competition and monopoly<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perfect-and-monopolistic-competition\/\">Perfect Vs Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopoly-and-monopolistic-competition\/\">Monopoly and monopolistic competition<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/product-differentiation-strategy\/\">Product differentiation strategy<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/monopolistic-competition\/\">Monopolistic competition<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/national-income-in-india\/\">National Income in India<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/measurement-of-national-income\/\">Measurement of national income in India<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/consumption-function\/\">Consumption function<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/keynesian-psychological-law-of-consumption\/\">Keynes Psychological law of consumption<\/a><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"266\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg\" alt=\"MONOPOLY MEANING\" class=\"wp-image-787\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1024x266.jpg 1024w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-300x78.jpg 300w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-768x199.jpg 768w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize-1536x398.jpg 1536w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-Presentation-resize.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption>MONOPOLY MEANING<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>MONOPOLY MEANING In this post you will get notes on Monopoly Meaning, Features of Monopoly and price determination under monopoly. The word Monopoly Meaning is the derivation from the combination of two words i.e., \u2018Mono\u2019 and \u2018Poly\u2019. Mono refers to a single and poly to control. In this way, monopoly refers to a market situation&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/monopoly-meaning\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;MONOPOLY MEANING&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":4061,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[113,92],"tags":[],"class_list":["post-4060","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-managerial-economics","category-micro-economics"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/4060"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=4060"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/4060\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/4061"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=4060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=4060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=4060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}