3 Answers | Add Yours
A monopolist can charge any price they want, but they will not maximize their profit by doing so. Some people think that monopolists can charge very high prices and people will have no choice but to buy the product. However, this is not so.
For example, let us say that there is only one firm that sells cable TV subscriptions in a given town. If you want to have cable TV, you do have to pay their price. However, if the monopolist raises the price on cable TV too high, people may simply choose not to buy any cable TV. This means that monopolists cannot simply raise prices as high as they wish and still maximize their profits. They, too, face a downward-sloping demand curve.
As a matter of definition, I think that a monopoly is not about high prices. A monopoply is about prices below cost, for example like public schools or the US Post Office.
monopoly can charge any price but however the price should be a sensible one. for example you cant charge about $100000 for a loaf of bread just because you are a monopoly. However the government does pass laws and regulations in order to control the prices and stop exploiting the consumers. therefore there are limitations as laws and regulation to control prices up to a certain extend.
We’ve answered 319,186 questions. We can answer yours, too.Ask a question