00:01
Okay, so a shift in the demand curve can definitely lead to a situation where a monopoly's price will remain constant while its output rises.
00:09
This scenario can be explained by understanding really how a monopoly operates in response to changes in market conditions.
00:17
So in a monopoly, the firm is going to be the sole provider of a particular service or particular good, and that's giving it significant market power.
00:27
The firm will typically choose the price and the quantity of output to maximize their own profit.
00:33
So when the demand curve...
00:35
...really several factors will come into play.
00:38
So let's actually take a look at some of these factors.
00:41
So first you have a shift in demand.
00:48
So let's say that the demand curve shifts...let's say it shifts to the right.
00:52
That's going to indicate an increase in consumer demand for whatever product that monopoly is making.
00:58
This could be due to changes in an increased population.
01:02
It could be consumer preferences.
01:04
It could be a lot of factors.
01:06
So that is definitely one factor that's going to come into play.
01:09
A second factor is the monopoly's market power.
01:20
So since the monopoly is the sole provider here, it can choose both the quantity of the output and also the price that it's producing...