Explain measurement of monopoly power.

1.	Explain measurement of monopoly power.
Answer» All monopolists do not belong to the same class. Some of them are more powerful while some are less powerful. Therefore, the ability to influence price is not uniform in all cases: (a) The more the variation between marginal cost and price, the monopolist power will also be correspondingly higher. (b) Powerful monopolists are able to obtain larger monopoly profits. (c) Where the elasticity of demand is less, the extent of monopoly power will be more. (d) Monopoly power will be less, where cross-elasticity of demand is high.

Answer»

All monopolists do not belong to the same class. Some of them are more powerful while some are less powerful.

Therefore, the ability to influence price is not uniform in all cases:

(a) The more the variation between marginal cost and price, the monopolist power will also be correspondingly higher.
(b) Powerful monopolists are able to obtain larger monopoly profits.
(c) Where the elasticity of demand is less, the extent of monopoly power will be more.
(d) Monopoly power will be less, where cross-elasticity of demand is high.

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