Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

 
7. Simple Monopoly:
In simple monopoly the monopolist charges the same price 
for his commodity from all buyers in the market. It operates in a 
single market and there is no discrimination of any kind e.g. 
cosmetic shampoos such as clinic plus and sun silk and herbal 
shampoos like clinic plus ayurvedic - they are distant substitutes. 
Check Your Progress: 
1. Define monopoly market. 
2. Monopolist is a price maker-explain. 
3. State the various types of monopoly. 
4.3 PRICE DETERMINATION UNDER MONOPOLY 
A monopolist is a "price maker" who can choose to fix the 
price of his product and a monopoly firm's supply curve is 
industry's supply curve, for the firm is the sole supplier in 
the market. 
Since the monopolist can fix the price of his product, Let us 
now understand how the monopolist will determine the price 
of his product: 
(1) The monopolist like any other producer has to consider the 
demand for his product as well as the supply conditions i.e. 
cost conditions while determining the price. 
(2) It must be noted that a monopolist faces a downward sloping 
demand curve which indicates that a monopolist can sell more 
output at a lower price and less output at a higher price. 

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(3) The main aim of the monopolist is maximization of profits. 
Therefore, the monopolist will fix the price at which his profits 
are maximum. 
(4) So once he decides upon the price, he has to produce that 
amount of output which is demanded at that price. 
(5) Hence, monopolist cannot fix both price and output at the 
same time. He has to fix one and accept the other. 
(6) Now the profit maximisation aim of the monopolist depends as 
usual on two factors.  
(a) the Revenue structure and (b) the Cost structure.