In addition, income will be transferred from consumers to the monopoly firm. This suggests that consumers will face a higher price, leading to a deadweight welfare loss. is a price setter rather than a price taker.Ĭomparison of monopoly and perfectly competitive outcomes reveals that the monopolist will set a higher price, produce a lower output and earn above normal profits (sometimes referred to as monopoly rents). Thus, the monopolist has significant power over the price it charges, i.e. By definition, the demand curve facing the monopolist is the industry demand curve which is downward sloping. In conventional economic analysis, the monopoly case is taken as the polar opposite of perfect competition. ![]() Monopoly is a situation where there is a single seller in the market.
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