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ASSIGNMENT-1
BILATERAL MONOPOLY
Submitted by
Bhavana Babu R.S.
Roll no: 09
I MA Economics
University of Kerala
Kariavattom Campus
1
CONTENTS
Page no:
INTRODUCTION
HISTORY OF BILATERAL
MONOPOLY
PRICE AND OUTPUT
DETERMINATION UNDER
BILATERAL MONOPOLY
CONCLUSION
REFERENCE
3-4
5
6-9
10
11
INTRODUCTION
MONOPOLY
Monopoly is a market situation where there is only one seller of
a product with no close substitutes.
Under the monopoly, the firm and industry are the same since
there is only a single firm.
The monopoly demand curve is negatively sloped. The negative
slope shows that the monopolist can either fix the quantity or
price, not the both . If he wants to sell more quantity, he has to
reduce price and if he want to sell at a high price he has to
reduce the quantity.
Entry is prevented in the bilateral monopoly so the monopolist
can earn extra profits in the long run.
Monopolys MR Curve
BILATERAL MONOPOLY
Assumptions
1) There is only a single commodity with no close
substituites.
2) The monopolist is its sole producer or seller.
3) The monopsonist is its only buyer.
4) The monopolist and the monopsonist are both free to
maximise their own individual profits.
e
P1
b
6
P*
D
P2
X2
e1
X1
X
M*
MCL
8
S= AC
W3
W1
W2
D=MRP
Q2
Q1
QL
CONCLUSION
9
REFERENCE
10
11