Question

1) Describe Monopoly market

2) List and explain Pricing Strategies within Monopoly market

Answer 1

1) A monopoly market refers to the type of market in which a single firm captures the entire market. Therefore, there is a single seller in the monopoly market. Since the seller has a complete dominance over the market, the seller enjoys significant market power in terms of controlling price and quantum of supply. There is high entry barrier in the monopoly market. Therefore, new entrants find it difficult to enter the market. The buyers have very less market power due to the absence of competitive firms. A monopolist faces a downward supply curve, therefore, increasing price results in lowers demand for the goods. A monopoly maximizes profit when the marginal revenue equals the marginal cost.