The above chart 4.0 illustrate comparing of perfect competition and monopoly. In the perfect competition price and quantity are determined by the intersection of the demand and supply curves which is known as equilibrium where as in monopoly the equilibrium quantity falls, and the equilibrium price rises. In contrast, monopoly market profit maximise quantity is at the point where the marginal revenue (MR) curve intersects the marginal cost (MC) curve and the profit-maximizing price is determined by the point on the demand curve that corresponds to this quantity.
This situation of the market allow, monopolies to maximise their profit which lead to set high rate price changed from the consumers and low outputs. In addition, with this condition, …show more content…
The monopolies market power is relatively higher than the competitive markets. The natural monopolies are beneficial to a country’s economy condition thought economical of scale or unfavourable in case of inefficient economy by producing less products to increase price of products.
It is essential for a government to protect the consumers by imposing regulations to the natural monopolies to control their market power and price for products and service. This is highly important when it comes to essential product and services industries which are operated by natural monopolies and where consumers are helpless. One method is by decreasing the natural monopoly power by increasing competition, allowing other operates to use the same Infrastructures without duplicating which allow them low cost of production/ operation cost . Another method is by imposing price restriction to the natural monopolies and allow lowest possible price for products and service. As there are many ways, government can control the power of natural monopolies in the interest of protecting both other competitors and
This situation of the market allow, monopolies to maximise their profit which lead to set high rate price changed from the consumers and low outputs. In addition, with this condition, …show more content…
The monopolies market power is relatively higher than the competitive markets. The natural monopolies are beneficial to a country’s economy condition thought economical of scale or unfavourable in case of inefficient economy by producing less products to increase price of products.
It is essential for a government to protect the consumers by imposing regulations to the natural monopolies to control their market power and price for products and service. This is highly important when it comes to essential product and services industries which are operated by natural monopolies and where consumers are helpless. One method is by decreasing the natural monopoly power by increasing competition, allowing other operates to use the same Infrastructures without duplicating which allow them low cost of production/ operation cost . Another method is by imposing price restriction to the natural monopolies and allow lowest possible price for products and service. As there are many ways, government can control the power of natural monopolies in the interest of protecting both other competitors and