Question

Explain how a seller can be a price maker in a monopoly.

Answer 1

1. In a monopolistic market, there is only one seller or producer. As a result, a monopolist has no competitors and confronts no competition.
2. Other enterprises' admittance is strongly restricted under a monopoly. Many entrance obstacles, such as natural, economic, technological, or legal, prevent competitors from entering the market when there is a monopoly.
3. In a monopoly, the individual supply of the monopolist becomes the market supply, and the firm itself becomes the industry.
4. As a result, a monopolist can establish any price for his goods. Similarly, he can use the price discrimination strategy to maximise profit.

In a monopoly, a seller can be a price maker.