The document discusses key aspects of monopoly markets including:
- A monopoly is defined as a single seller of a product without close substitutes that controls the entire market.
- Features of monopoly include barriers to entry that allow the firm to be a price maker and make independent output decisions.
- Monopolies can maximize profits in the short run but aim for normal profits in the long run to deter new competition.
- Monopolies are economically inefficient as they produce at lower output levels than would be optimal, resulting in deadweight loss.
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Equilibrium of Firm Under Perfect CompetitionPiyush Kumar
Â
The ppt incorporates lots of animations for clear explanation on graphs and curves, it's better to download it first and then surely you will be cherished with it
This is a presentation on market structure - topic of Economics -
It includes:
What is Market?
What is market structure?
Characteristics of Market
Classification of Market
1)Area or region
2)Time
3)Functions
4)nature of Commodity
5)Legality
Types of Market structure
characteristics of all market structures
This can be useful for BBA student of 1st year.
Income elasticity of demand is the degree of responsiveness of quantity demanded of a commodity due to change in consumerâs income, other things remaining constant. In other words, it measures by how much the quantity demanded changes with respect ot the change in income.
Students should be able to:
Understand the assumptions of perfect competition and be able to explain the behaviour of firms in this market structure.
Understand the significance of firms as price-takers in perfectly competitive markets. An understanding of the meaning of shut-down point is required. The impact of entry into and exit from the industry should be considered.
Equilibrium of Firm Under Perfect CompetitionPiyush Kumar
Â
The ppt incorporates lots of animations for clear explanation on graphs and curves, it's better to download it first and then surely you will be cherished with it
This is a presentation on market structure - topic of Economics -
It includes:
What is Market?
What is market structure?
Characteristics of Market
Classification of Market
1)Area or region
2)Time
3)Functions
4)nature of Commodity
5)Legality
Types of Market structure
characteristics of all market structures
This can be useful for BBA student of 1st year.
Income elasticity of demand is the degree of responsiveness of quantity demanded of a commodity due to change in consumerâs income, other things remaining constant. In other words, it measures by how much the quantity demanded changes with respect ot the change in income.
The presentation sums up the telecom sector in India till 2015 and how the oligopoly market wars goes between the top companies. Also the kinked demand curve that is generated due to oligopoly market analysis. It has got it all!
Students should be able to:
Use simple game theory to illustrate the interdependence that exists in oligopolistic markets
Understanding the prisonersâ dilemma and a simple two firm/two outcome model. Students should analyse the advantages/disadvantages of being a first mover
Students will not be expected to have an understanding of the Nash Equilibrium
Tnx group 15
For downloading this contact- bikashkumar.bk100@gmail.com
Prepared by Students of University of Rajshahi
MD: AL AMIN
SAIFUL ISLAM
RUKSANA PARVIN RUPA
SHAMIM MIA
LIMA AKTER
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Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
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Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
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A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
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LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
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Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.đ¤¯
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[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
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1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
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CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Kseniya Leshchenko: Shared development support service model as the way to ma...Lviv Startup Club
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Kseniya Leshchenko: Shared development support service model as the way to make small projects with small budgets profitable for the company (UA)
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
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Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
2. Lecture plan
Objectives
Introduction
Features
Types of Monopoly
Demand and MR Curve
Price and Output Decisions in Short Run
Price and Output Decisions in Long Run
Supply Curve of Monopolist
Multiplant Monopolist
Price Discrimination
Price and Output Decisions of Discriminating
Monopolist
ī§ Economic Inefficiency of Monopolist
ī§
ī§
ī§
ī§
ī§
ī§
ī§
ī§
ī§
ī§
ī§
2
3. Objectives
ī§ To examine the nature and different forms of a monopoly
market.
ī§ To explore the vistas of emergence of monopoly power,
with focus on barriers to enter the market.
ī§ To analyze the pricing and output decisions of a
monopolist in the short run and long run.
ī§ To develop an understanding of output and pricing
decisions of a multi plant monopolist.
ī§ To explore the nuances of price discrimination by a
monopolist and the different degrees of such
discrimination.
ī§ To lay down a representation of the economic
inefficiency of monopoly.
3
4. Introduction
ī§ A monopoly (from the Greek word âmonoâ meaning
single and âpoloâ meaning to sell) is that form of market
in which a single seller sells a product (good or service)
which has no substitute.
ī§ Monopoly exists when there is no close substitute to the
product and also when there is a single producer and
seller of the product
ī§ E.g. Indian Railway is a monopoly, since there is no other
agency in the country that provides railway service.
ī§ Pure monopoly is that market situation in which there is
absolutely no substitute of the product, and the entire
market is under control of a single firm.
4
5. Features
ī§ Single seller
ī§ The entire market is under control of a single firm.
ī§ Single product
ī§ A monopoly exists when a single seller sells a
product which has no substitute or, at least, no close
substitute in the market.
ī§ No difference between firm and industry
ī§ There is a single firm in the industry
ī§ Independent decision making
ī§ Firm is regarded as a price maker
ī§ Restricted entry
ī§ Existence of barriers leads to the emergence and/or
survival of a monopoly
5
6. Types of Monopoly
ī§ Legal Monopoly
ī§ Created by the laws of a country in the greater public interest.
ī§ To prevent disparity in distribution of wealth, or imbalanced
growth of the economy
ī§ Economic Monopoly
ī§ Created due to superior efficiency of a particular player.
ī§ Attainment of economies of scale leads to monopoly, often referred
to as an âinnocentâ or a structural barrier.
ī§ Technical know-how restrained in the hold of single firm
ī§ Natural Monopoly
ī§ Formed when the size of the market is so small that it can
accommodate only one player.
ī§ Regional Monopoly
ī§ Geographical or territorial aspects also help in creation of
monopolies.
6
7. Demand and MR Curves
ī§ The demand curve of the
monopolist is highly price
inelastic because there is no
close
substitute
and
consumers have no or very
little choice.
Revenue,
Cost
O
MR
AR
Quantity
ī§ It is not perfectly inelastic
because pure monopoly does
not exist in real life.
ī§ Hence it faces a normal
downward sloping demand (AR)
curve.
ī§ The monopolist cannot set
both price and quantity at its
7
own will.
8. Price and Output Decisions in Short Run
ī§ In order to maximize profit a
monopoly firm follows the rule
of MR=MC when MC is rising.
ī§ A monopoly firm may earn
supernormal profit or normal
profit or even subnormal profit
in the short run.
ī§ The negative slope of the
demand curve is instrumental
for chances of monopoly
profits in the short run.
ī§ In the short run, the firm would
reap the benefits of supplying
a product which not only is
unique, but also has negligible
cross elasticity.
Price,
Revenue,
Cost
MC
B
PE
A
AC
AR
E
MR
O
QE
Quantity
Firm maximizes profit where
(i) MR=MC (ii) MC cuts MR from
below, at point E.
Equilibrium price=OPE, Output= OQE
Total revenue =OPEBQE
Total cost = OAEQE
Supernormal profit= AEBPE, since
price PE > Average cost
8
9. Price and Output Decisions in Short Run
Price,
Revenue,
Cost
MC
Price,
Revenue,
Cost
AC
B
PE
A
PE
MC
AC
B
C
E
AR
E
MR
O
QE
MR
AR
Quantity
O
QE
Quantity
Total revenue= OPEBQE
Total revenue= OPECQE
Total cost = OPEBQE
Total cost = OABQE
Profit = Nil
Loss = ABCPE
Firm makes normal profit.
Firm makes loss.
9
10. Price and Output Decisions in Long Run
ī§ A monopolist is in full control of the market price
ī§ It would not continue to incur loss in the long run.
ī§ It would try to reduce cost of production
ī§ Otherwise it would close down in the long run.
ī§ Monopolist would try to earn at least normal profit in the long run and
may earn supernormal profit due to entry restrictions in the market.
ī§ If in the long run a monopoly firm earns supernormal profit
ī§ This would attract competition and high price would make it possible for a
new entrant to survive.
ī§ To retain its monopoly power, the firm may have to resort to a low
price and earn only normal profit even in the long run to create an
economic barrier to new entrants.
10
11. Supply Curve of Monopoly Firm
ī§ A monopolist is a price maker
ī§ The firm itself sets the price of the product it sells,
instead of taking the price as given.
ī§ It equates MC with MR for profit maximization,
but unlike perfect competition, it does not
equate its price to MR.
ī§ Supply of the good by the monopolist at a given
price would be determined by both the market
demand and the MC curve.
ī§ As such, there is no defined supply curve for a
monopolist.
11
12. Multi Plant Monopoly
ī§ A monopolist may produce a homogeneous product in different
plants.
ī§ different cost functions but the same demand function for the entire
market.
ī§ hence the same AR and MR curves for the entire market.
ī§ A multi plant monopolist has to take two decisions:
ī§ how much to produce and what price to sell at, so as to maximize its profit
ī§ how to allocate the profit maximizing output between the plants.
ī§ Assuming that a monopoly firm produces in two plants, A and B.
ī§ Profit maximising output will be at MR= MCA= MCB
ī§ If MCA< MCB, it would increase production in A, (lower MC) and reduce
production in B (higher MC), till the equality is satisfied.
ī§ The firm produces till MCA and MCB are individually equal to MR, which
is same for both plants.
12
13. Multi Plant Monopoly
Price,
Revenue,
Cost
P
R
MC
B1
B
E
R1
MR
O
MCA ACA
AC
Q
B2
R2
E1
MCB
P= AR
E2
MC=MR
AR
Quantity
ACB
QA
QB
ī§ OQ is the profit maximizing output satisfying MR=MC, when MC is
rising. QA+QB= OQ, i.e. total output
ī§ Price is shown by PP, which determines AR in both the plants.
ī§ OP is the equilibrium price and RPBE is the total profit (TR-TC) of the
firm (Panel a).
ī§ Panel b shows the cost function of plant A, in which MC is lesser.
ī§ Panel c shows the cost function of plant B in which MC is greater.
13
14. Price Discrimination
ī§ Discrimination among buyers on the basis of the price charged for
the same good (or service).
ī§ Objective is to maximise sales
Preconditions of Price Discrimination
ī§ Market control
ī§ Market imperfection and control are necessary
ī§ Monopoly is the most suitable market condition, because it is a
price maker.
ī§ Division of market
ī§ when the whole market can be divided into various segments,
and transfer of goods between the markets is not possible
ī§ Different price elasticities of demand in different markets
ī§ Separation of market is a necessary condition for price
discrimination, but the sufficient condition is that price elasticities
of demand should be different in these market segments
14
15. Bases of Price Discrimination
ī§ Personal
ī§ On basis of the paying capacity and/or the intensity of needs.
ī§ Since this discrimination is being done on a personal basis, the
good (or service) is non transferable.
ī§ Geographical
ī§ People living in different areas are required to pay different
prices for the same product.
ī§ E.g. edible oils and many packaged food items are sold at different
prices in different States of India.
ī§ Time
ī§ The same person may be required to pay different prices for the
same product.
ī§ E.g. off season discounts.
ī§ Purpose of use
ī§ Customers are segregated on basis of their purpose of use.
ī§ E.g. electricity rates are lower for domestic purpose and higher for
industrial purpose.
15
16. Degrees of Price Discrimination
Pigou has identified three degrees of price discrimination.
ī§ First Degree
ī§ charges a price exactly equal to the marginal utility of the consumer
and leaves no consumer surplus.
ī§ Joan Robinson referred to it as perfect discrimination.
ī§ Second Degree
ī§ Divides consumers in groups on the basis of their paying
capacities; a person with lower paying capacity is charged a lower
price and vice versa
ī§ Takes away the major (but not entire) portion of consumer surplus.
ī§ Third Degree
ī§ Segregates consumers such that each group of consumers is a
separate market, and charges the price on basis of price elasticity
of different groups.
ī§ Takes away only a small portion of consumer surplus.
16
17. Degrees of Price Discrimination
First Degree: Monopolistâs income is equal to the area OPEQ leaving no
consumer surplus. MR curve coincides with AR.
Second Degree: divided consumers in three segments and charges price P1,
P2, P3 and leaves some surplus except the third group which marginal
consumer.
Third Degree: charges higher price to buyers with less elastic demand and
lower price to those with highly elastic demand, and maximizes its revenue.
Price
P1
P
P2
E
E1
A1
P3
E2
A2
E3
D=MR
O
Q
Quantity
First degree
E1
P1
P
E
A1
D
D
O
Q1
Q2 Q3
Second degree
O
Q1
Q
Third degree
18. Price and Output Decisions of
Discriminating Monopolist
ī§
Assume that the firm can segregate the market on basis of price elasticity of
demand: M1 with high price elasticity and M2 with low price elasticity.
ī§
The rule is:
ī§ Lower price and more supply in the market with high price elasticity
ī§
ī§ Higher price and less supply in the market with low price elasticity.
The firm will charge lower price in the market M1 and higher price in the market
M2 and it would supply more to the market M1 and less to the market M2.
ī§
Firm would determine the profit maximizing output at MC=MR while MC is
increasing.
ī§
The upper portion of the AR curve refers to the less elastic demand and the
lower portion to highly elastic demand.
ī§
The MR curve corresponds to the AR curve.
19. Price and Output Decisions of
Discriminating Monopolist
Price,
Revenue,
Cost
Firm
Market 2
Market 1
MC
P
P1
E
MR1
MR AR
O
Q
Quantity O
P2
E1
Q1
E2
MC=MR1=MR2
AR1
MR2
O
AR2
Q2
ī§ In the market M1 the optimum output is OQ1 and in the market M2 the
optimum output is OQ2. (OQ1> OQ2 and OP1< OP2)
ī§ Price discrimination leads to greater profits.
ī§ Without price discrimination, for output OQ, the firm would earn the
area OPEQ, which is less than the area given by OP1E1Q1+OP2E2Q2.
19
20. Economic Inefficiency of Monopoly
ī§ A monopoly firm operates at less than optimum output and charges
a higher price.
ī§ Monopoly does not allow optimum use of all the factors of
production, thereby allowing loss of output and creating excess
capacity in the economy
ī§ Considered as a loss of social welfare, hence authorities make
regulations to check and prevent monopoly practices.
ī§ Also termed as deadweight loss to the economy, since this increase
in output is actually possible under perfect competition.
ī§ Compare two firms, one under perfect competition, and the other
under monopoly to explain the condition; assuming that both the
firms earn normal profits.
ī§ The firm under perfect competition faces a horizontal demand curve
(DC), whereas the monopoly firm faces a downward sloping curve D M,
which is less elastic.
20
21. Economic Inefficiency of Monopoly
ī§ The monopolist produces an output QM(<QC), and sells at price PM(>PC)
ī§ OQC-OQM (i.e. QMQC), is regarded as excess capacity (Fig 1).
ī§ Perfectly competitive firm allows maximum consumer surplus (P CDB);
Monopoly takes away PCPMAE from consumers to the firm. (Fig 2).
ī§ AEB is neither part of firmâs income nor of consumer surplus; hence is the
deadweight loss or economic inefficiency due to monopoly.
Price,
Revenue,
Cost
PM
PC
LAC
EM
D
A
PM
EC
DC
E
PC
DM
O
QM
QC
Fig 1: Excess Capacity
Quantity
O
QM
MRM
B
MC=AC=MRP
=ARP
ARM
Quantity
QC
Fig 2: Deadweight Loss
21
22. Summary
ī§
ī§
ī§
ī§
ī§
ī§
ī§
A monopoly is that form of market in which a single seller sells a product
(or service) which has no substitute.
Pure monopoly is where there is absolutely no substitute of the product,
and the entire market is under control of a single firm.
A monopoly has a single seller, sells a single product (pure monopoly) and
decides on its own price and output, based on individual demand and cost
conditions and is hence regarded as a price maker.
In monopoly the firm and the industry are one and the same.
Barriers to entry are the major sources (or reasons) of monopoly power
and may include restriction by law, control over key raw materials,
specialized know how restricted through patents or licences, small market
and economies of scale.
A monopoly firm has a normal demand curve with a negative slope. The
demand curve is highly price inelastic because there is no close substitute.
A monopolist firm may earn supernormal profit, or normal profit, or may
even incur loss in the short run, but would not incur loss in the long run.
22
23. Summary
ī§
ī§
ī§
ī§
ī§
ī§
The monopolist being a price maker does not have any supply curve.
A multi plant monopolist decides on how much to produce and what price to
sell at so as to maximize its profit on the basis of the principle of
marginalism.
When a seller discriminates among buyers on basis of the price charged for
the same good (or service), such a practice is called price discrimination.
Price discrimination can be done on personal basis (demographical, paying
capacity or need), on the basis of geography, on the basis of time or
purpose of use.
The discriminating firm will charge a higher price and supply less to the
market having higher price elasticity and a lower price and supply more in
the market having lower price elasticity.
Monopoly runs at less than optimum level of output and generates excess
capacity in the economic system, which in turn results in deadweight loss
that adds neither to consumer surplus, nor to sellerâs profit.
23