monopoly is a structure of market

1. Welcome to presentation
By:
Matiullah (11170)

2.  Perfect competition
 Monopolistic competition
 Oligopoly
 Monopoly
Market structure

3.  A monopoly is a Greek word, mono means ‘’single’’
and polien/poly mean ‘’to sell’’.
 Definition: A monopoly is a market structure in which
there is only one seller/producer for a product
 Example : Boeing aircraft company.
Monopoly

4.  In business the monopoly starts form 25% of the
market share with one producer.
 When the supply of the market reach to 50% it is
called dominant monopoly.
 Pure monopoly is a situation where the firm get 100%
of the market share.
Cont….

5.  Profit maximizer
 Price maker
 High barriers to entry and exit
 Single supplier/seller
 Price discrimination
Characteristics of monopoly

6.  Comparing Monopoly and Competition
 For a competitive firm, price equal to marginal
cost(P=MR=MC).
 For a Monopoly firm, price exceeds marginal
cost(P>MR=MC).
Profit Maximization

7. PRICE
COST
REVENUE
QUANTITY
MR
MC
Pe
Qmax
The profit maximising level of output Qmax
and
the price the Monopoly will receive Pe
AR=P=D
A Monopoly

8. PRICE
COST
REVENUE
QUANTITY
MR
A Monopoly
MC
AR=P=D
CAUTION: A number of students get caught in the
trap of labelling Pe where MC cuts MR – THIS IS
WRONG
Pe
Qmax
CORRECT METHOD
Run up though
MC=MR right up to
the demand curve to
illustrate the price

9. PRICE
COST
REVENUE
QUANTITY
MR
MC
Pe
AR=P=D
MR=MC
Qmax
O
ATC
Monopoly in short run
Abnormal profit

10. PRICE
COST
REVENUE
QUANTITY
MR
MC
Pe
AR=P=D
MR=MC
QmaxO
ATC
Monopoly in long run

11.  In long run the abnormal profit become zero or finish
because the demand of people for product become
divided among different suppliers.
 And with this, the demand curve shift to left side and
the ATC curve intersect the AR or demand curve.
Why the abnormal profit finish in
long run?

12.  A monopoly is a firm that is the sole seller in its
market.
 It faces a downward sloping demand curve for its
product.
 A monopoly marginal revenue is always below the
price of its goods.
 A monopolists can raise their profits by charging
different prices to different buyers based on their
willingness to pay.
Summery