When an oligopolist individually chooses its level of production to maximize its profits, it charges a price that is.

Q. One type of violation of the antitrust laws is the abuse of monopoly power. Monopoly power is the ability of a firm to raise its prices above the competitive level—that is, above the level that would exist naturally if several firms had to compete—without driving away so many customers as to make the price increase unprofitable. In order to show that a firm has abused monopoly power, and thereby violated the antitrust laws, two essential facts must be established. First, a firm must be shown to possess monopoly power, and second, that power must have been used to exclude competition in the monopolized market or related markets.
The price a firm may charge for its product is constrained by the availability of close substitutes for the product. If a firm attempts to charge a higher price—a supracompetitive price—consumers will turn to other firms able to supply substitute products at competitive prices. If a firm provides a large percentage of the products actually or potentially available, however, customers may find it difficult to buy from alternative suppliers. Consequently, a firm with a large share of the relevant market of substitutable products may be able to raise its price without losing many customers. For this reason courts often use market share as a rough indicator of monopoly power.
Supracompetitive prices are associated with a loss of consumers’ welfare because such prices force some consumers to buy a less attractive mix of products than they would ordinarily buy. Supracompetitive prices, however, do not themselves constitute an abuse of monopoly power. Antitrust laws do not attempt to counter the mere existence of monopoly power, or even the use of monopoly power to extract extraordinarily high profits. For example, a firm enjoying economies of scale—that is, low unit production costs due to high volume—does not violate the antitrust laws when it obtains a large market share by charging prices that are profitable but so low that its smaller rivals cannot survive. If the antitrust laws posed disincentives to the existence and growth of such firms, the laws could impair consumers’ welfare. Even if the firm, upon acquiring monopoly power, chose to raise prices in order to increase profits, it would not be in violation of the antitrust laws.
The antitrust prohibitions focus instead on abuses of monopoly power that exclude competition in the monopolized market or involve leverage—the use of power in one market to reduce competition in another. One such forbidden practice is a tying arrangement, in which a monopolist conditions the sale of a product in one market on the buyer’s purchase of another product in a different market. For example, a firm enjoying a monopoly in the communications systems market might not sell its products to a consumer unless that customer also buys its computer systems, which are competing with other firms’ computer systems. The focus on the abuse of monopoly power, rather than on monopoly itself, follows from the primary purpose of the antitrust laws: to promote consumers’ welfare through assurance of the quality and quantity of products available to consumers

Q. Would the use of leverage meet the criteria for abuse of monopoly power outlined in the first paragraph?

Q. State whether the following statement are TRUE and FALSE.

1. There is no price discrimination under Monopolistic competition.

2. In a monopoly market, firm and industry are the same.

3. Product differentiation is not possible under perfect competition.

4. Under perfect competition, price is determined by equilibrium of demand and supply.

Q. Give reasons or explain:

1. Single price prevails in perfect competition.

2. Price discrimination is possible under monopoly.

3. Selling cost is incurred by a firm in Monopolistic competition.

4. A monopolist can control the supply of goods.

5. Sellers and the buyers are price takers in perfect competition.

Q.

Under perfect competition, the seller is a price taker. Under monopoly, he is the price maker. Explain.

Q. Under perfect competition, the price is determined by the industry. At this price a firm can sell any quantity. The AR curve is perfectly elastic. Under monopoly, firms can sell more only at a lower price. So, AR is negatively sloped.
Which form of market is known as a price taker?

[1 mark]

When an oligopolist individually chooses its level of production to maximize its profits, it charges a price that is.

The correct option is D less than the price charged by a monopoly and more than the price charged by a competitive market.Oligopoly is an important form of imperfect competition and in the market price will be less than monopoly but more than competitive market.

The correct option is D less than the price charged by a monopoly and more than the price charged by a competitive market.
Oligopoly is an important form of imperfect competition and in the market price will be less than monopoly but more than competitive market.