How do the different market structures like monopolies, duopolies affect the prices of different items we...

How do the different market structures like monopolies, duopolies affect the prices of different items we buy?

Expert Solution

Soln. Market structure does affect the pricing strategy of the product but organizations are not so free to set any price of the product as per their choice. There are some binding criteria, that they need to take into consideration before setting up the price of the good. In duopolies market, price of the goods set depends on the quantity of the goods produced by respective firm and based on the quantity, they decide the price. In perfect competitive market, every firm has to set the equal price for similar products to maintain the market equilibrium. In oligopoly market firms decide the price by dividing the demand and setting the price accordingly. In monopoly market, due to lack of competition, firm is free to set the price as to maximize the profit. Based on the market structure, firms set the price and to derive profit and profit is not the only criteria that decides the price of the good.

Rahul Sunny answered 1 year ago

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