Why are Monopolies able to profit maximise?

Essentially there are several features of a market structure which determines why monopolies are able to profit maximise.
Very small number of sellers in the given market, In a pure monopoly there is only one seller, however in real life firms with over 25% market share are considered monopolies. some examples are usually very few utility providers- natural monopolyThe product is unique there aren't many alternatives.The firm is a price maker not a price taker, holds the market power over the consumerConsumers may or may not have perfect knowledge.There are barriers to entry, with the example of the natural monopolies you have to build the national grid build power stations, high sunk costs- barriers to exit


Answered by Economics tutor

1799 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is the likely effect of Brexit on the UK economy?


Perfect competition theory is based on very unrealistic assumptions. Evaluate whether such a theory is useful in explaining the behaviour of real world firms.


How can the Government improve economic growth/real GDP of a country?


Explain why the use of petrol and diesel cars may be a source of market failure.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning