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

1733 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Discuss whether a reduction in taxation will always increase a country’s economic growth rate.


What is meant by an oligopoly being both interdependent and uncertain in their price strategies?


What happens to the Production Possibility Frontier (PPF) when productivity only increases in one good?


What determines the elasticity of demand?


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:

© 2025 by IXL Learning