Monopoly for theory firm and markets.

The firm as a unit of production that make decision to maximize profits and then theory of market is ability to manipulate the price what are they produce. Monopoly is one firm that can make price maker because they have the ability to establish or adjust the market price by their own. They also known as a single seller in the market and not have any competitor, so the monopoly can do anything to dominate the market. Monopoly also formed under certain condition by the government.

As an example I take Jabatan Bekalan Air Malaysia (JBA) is fully under government, the water supply department have no competitor. They also provide the water to all Malaysian citizen. It is a unique type of product and it is a one seller to many buyers in the market. It provides unique goods to the buyer. Therefore, for profit they can get for the long-term. Of course they can make decision to put the price for their own. But under the government they do not put the high price for citizen. Because they objective to help people in the country. Overall, monopoly is a market structure that provides unique product to various buyers that conquers the whole market so that they can maintain super-normal profits in the long-run.

Types of profit Jabatan Bekalan Air Malaysia (JBA) can attain.

1. Super-normal profits.

A monopoly has a high barrier for a company to enter the industry. Monopoly is a price setter. The max profit is when marginal revenue is equal to marginal cost. For this, long-run profits can be attain. A monopolist with no substitutes would be able to derive the greatest monopoly power. Super profit is profit when it reaches the level of profit than normal profit. Definition of normal profit occurs when the Average Revenue AR = ATC (average total cost). supernormal profit is defined as an additional advantage over normal profit levels. Super-normal profits occur where AR> ATC. Super-normal profits also known as abnormal profits. It is clear here super-normal profit can be achieved if there is no other firm can enter the market to provide water to customers. Jabatan Bekalan Air Malaysia (JBA) is the only company authorized and under government to provide such services.