Monopoly Pricing

Monopoly pricing occurs when a single company dominates a market and has little to no competition. Because they control the supply of a product or service, they can set prices higher than in competitive markets, where multiple firms compete. The monopolist considers how much customers are willing to pay and balances profit with potential loss of sales. This results in higher prices and lower output compared to competitive markets. Essentially, a monopoly has the power to determine prices due to its exclusive market position, often leading to increased profits but also potential inefficiencies in resource allocation.