Monopoly profits differ in two respects

Monopoly profits differ in two respects - efficient and...

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Monopoly profits differ in two respects : i) Monopoly profits are permanent and enjoyed in the short as well as long run . There is no fear of monopoly profits being competed away . ii) Monopoly profits arise out of control over conditions in the market . The monopolist follows restrictive policies and charges a higher price. This is the source of his profits. It is made clear by a downward sloping demand curve. Competitive Super Normal profits, on the other hand, are the result of more
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Unformatted text preview: efficient and favorable conditions of production. Whether a monopolist will always earn extra profits or be satisfied with normal profits depends upon the technical cost conditions of a monopolist and the flexibility of the demand curve. By nature , a monopolist is not likely to allow his profits to fall. He will maintain some positive profits through restrictive practices....
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This note was uploaded on 11/26/2011 for the course ECONOMIC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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