Monopoly is a kind of basic market structures, which used to describe a firm that is the single producer of a product in a certain market and there are no close substitutes (Mankiw, 2007). The aim of a monopoly firm is simple which is just to maximize its profit. In a general market, the companies should decide how much to produce and what the price provided by the other competitors. While, there are no competitors in the monopoly market, the monopoly firm is able to vary the price of its goods by adjusting the quantity produced. But how does the monopoly calculate how much quantity to produce can maximize its profit? In order to find it out, the economists introduce three curves to solve this problem, which are showing in the Figure 1. The first curve is Demand Curve, which depicts the... [continues]
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