Meaning of Monopoly

Monopoly

In monopoly market, there is only one seller for any particular things and there is no alternative product or thing available in the market. In this market, one firm is equal to the whole industry so the demand curve is same & have a stable demand. In this market, supplier knows the customer interest and income level. In this market, the cross elasticity of product is zero.

Monopoly

Average revenue (AR) is the demand curve in monopoly market because it is a rectangular hyperbola. In this market, a supplier control one thing either production or price.

If supplier select price “P” so selling quantity “Q” will be decided by customer. If a seller selects the “Q” level of production then “OP” price decide by the consumer.

Revenue in different types of market

Revenue in different types of market        

Pure competition – in this market every manufacturing produce same types of goods & services. There are lots of manufacturing units available in the market. Demand & supply balance the market and fix the price in the market. The price is also same in the whole market.

Revenue in Pure Competition

Monopoly or imperfect competition – in this market, only one manufacturing units available in the market and market demand is already given. Manufacture adjust its price its own. Average revenue is down in the slope and marginal revenue stand below its AR. Company know the demand and they sell the more quantity on a lower price that way MR below the AR.

Revenue in monopoly

Oligopoly – in this market, there are few manufacturing units and also their behaviour influences the other unit’s policy. If a company increases their price then other company not follows the same because consumer always prefer to buy a cheaper/low price things. In this market AR & MR are down in slope. MR put down or below the AR line but they are not in direct down but there are lot of kinks in the line.

Revenue in Oligopoly