Monopoly is a type of industry market in which there is a single seller of a product that has no close substitutes. A monopoly also means the seller himself. Unlike a perfectly competitive market, in which a large number of competing sellers offer a standardized product, pure monopoly there are no competitors in the market for its product. Pure monopoly in real life It is quite rare and is more often found in local markets rather than national or global markets. The monopoly product must be unique in the sense that there are no good or close substitutes of this product. In such a situation, the buyer has no acceptable alternatives to consuming this product: he must buy it from the monopolist or do without this product. Since the monopoly firm is the only seller, the demand curve for this firm will be nothing more than the curve market demand. From this it is clear that this curve has a negative slope. An ideally competitive firm can sell as much as it wants at the market price. A monopoly does not take price as a given. As output increases, the price must decrease because the demand curve slopes downward.

In order to increase prices, the monopolist is forced to reduce the volume of production (sales), because consumers always respond to price increases by reducing purchases of this good. Therefore, a competitive profit-maximizing firm must identify only the optimal output level. A monopolist firm pursuing the same goal must not only determine the quantity of goods that maximizes profit, but also set a price at which the entire quantity produced would be purchased by consumers.

An absolute or pure monopoly occurs when one firm becomes the sole producer of a product for which there are no close substitutes or substitutes. A pure monopoly is characterized by a number of specific features.

A monopolist enterprise represents an entire industry, i.e. the latter is represented by only one company. This company is the only manufacturer or sole supplier of this product. Consequently, the laws of supply and demand operate in the same way and their manifestation is unambiguous, for an individual enterprise, for an industry and as a whole.

Pure monopoly, like perfect competition, is a theoretical abstraction; In reality, a situation where there is only one producer of goods that have no substitutes on the market is practically impossible. In a pure monopoly, there is only one seller of a product in the market that has no close substitutes. Under imperfect competition, the monopolist has some power over price (depending on the type of monopoly);

he consciously seeks and sets the price level at which profit would be maximized.

At the same time, the monopolist is not able to set the volume of demand;

According to the law of demand, when the price rises, the quantity demanded falls, and when the price falls, it increases. The demand curve for the product of a pure monopolist is the industry demand curve.

Conditions for maximizing profits by a monopolist

Monopoly is such market structure, in which there is only one firm selling a product on the market. Due to the fact that a monopoly firm controls the entire market, the residual demand for its products is relatively inelastic. The monopolist is a price taker - the volume of its sales affects the price at which this volume can be sold. Consider the problem of maximizing profit for a monopolist. The more quantity of goods a monopolist wants to sell, the lower the price per unit of goods should be. Because of the law of demand, marginal revenue—the increase in revenue when sales increase by one unit—decreases as sales increase. To ensure that the monopolist's total revenue does not decrease, the price reduction (that is, the monopolist's loss on each additional unit of goods sold) must be compensated by a large percentage increase in sales volume. Consequently, it is advisable for a monopolist to conduct its operations in the elastic part of demand.

As output increases, the monopolist's marginal costs increase (or at least remain constant). The firm will expand output as long as the additional revenue from selling an additional unit of output exceeds, or at least is not less than, the additional costs associated with its production, because when the cost of producing an additional unit of output exceeds the additional revenue, the monopolist suffers a loss.

Let's formalize what has been said. Let π be the profit of the monopolist (π = TR-TC, where TR is the total revenue of the monopolist, TC is its total costs). Both revenue and costs depend on the quantity of products produced and sold. Therefore, profit is a function of quantity π = f(Q). Conditions for maximizing profit:

The first condition: MR = MC, where MR is marginal revenue, MR =ΔTR/ΔQ and MC is marginal cost, MC = ΔTC/ΔQ.

Second condition: ΔMR/ΔQ = ΔMC/ΔQ.

rice. 1.3.1 Profit maximization

Profit is maximum if, if marginal revenue is equal to marginal cost, marginal revenue decreases with increasing output to a greater extent than marginal cost. In conditions of profit maximization by a monopolist, marginal costs, in contrast to the perfect competition market model, can decrease. A monopolist can, while maximizing profits, refuse to increase output, even if the marginal and average costs of production decrease. This, as is known, serves as one of the arguments in favor of the thesis about the production inefficiency of a monopoly.

Let's find the price that the profit-maximizing monopolist will set. To do this, we show the dependence of marginal revenue on price:

MR = Q*(ΔP/ΔQ) + P

By multiplying the first term by P/P and Q/Q, since ΔQ/ ΔP * P/Q = Ed, where Ed is the price elasticity of demand, the resulting expression can be rewritten as: MR = P (1+1/ Ed)

From the condition of maximum profit it follows that the price of the monopolist and the marginal costs of production are related by the relationship:

P = MC/(1+1/ Ed);

Since Ed< -1 (спрос эластичен), цена монополиста всегда будет больше его предельных издержек. Процентное превышение цены над предельными издержками, как мы знаем, отражает уровень монопольной власти.

Does this mean that a monopolist cannot incur losses? Whether the monopolist will make a profit or incur losses depends on the ratio of the maximum willingness of buyers to pay and the average cost of production at the optimal output volume (when the condition MR = MC is satisfied). If the firm’s average production costs Qm are higher than the demand price, then, despite the fact that the monopolist produces the optimal volume of products and sets a price above marginal costs, its profit is negative (Fig. 2.3.1)

Rice. 2.3.1 Losses under monopoly conditions

Qm - amount of losses

The main difference between a perfectly competitive market and an imperfectly competitive market is that in the former, firms do not have market (monopoly) power, while in the latter, they do. Monopoly power means the ability of a firm to influence the price of its products, i.e. install it at your own discretion. Firms with monopoly power are called price producers (in another translation - price seekers). Firms operating in a perfectly competitive market, on the other hand, can be characterized as price takers because they accept the market price as externally determined by the market itself and outside their control, and therefore do not have monopoly power.

A market such as a monopoly is a market with imperfect competition, and, therefore, the firms operating in it have monopoly power, although for different reasons.

So, a firm has market power when it can influence the price of its product by changing the quantity it is willing to sell. The latter means that the demand curve for the products of such a company cannot be a horizontal line, but must have a negative slope. Once price becomes a function of the quantity sold, marginal revenue will be less than price for any positive output. Therefore, the profit maximization condition for any firm will be exactly the same as for a pure monopolist: the profit-maximizing output level is achieved when marginal revenue equals marginal cost.

From this we get an extremely important conclusion: a firm has monopoly power if the price at which it sells the optimal quantity of output exceeds the marginal cost of producing that quantity of output. Of course, the monopoly power of a firm operating under monopolistic competition or in an oligopoly market is less than the market power of a pure monopolist, but it still exists.

This raises two questions. First, how can we measure monopoly power so that we can compare one firm to another from this perspective? Second, what are the sources of monopoly power and why do some firms have more monopoly power than others?

Recall the important difference between a perfectly competitive firm and a firm with monopoly power: for a competitive firm, price equals marginal cost; for a firm with monopoly power, price exceeds marginal cost. Therefore, the way to measure monopoly power is the amount by which the profit-maximizing price raises the marginal cost of optimal output.

In particular, we can use the rate of excess of price over marginal cost. This method definition was proposed in 1934 by the economist Abba Lerner and was called the Lerner monopoly power index:

Basic conditions for maximizing profits

Profit maximization refers to the firm's desire to obtain the greatest profit. For this purpose, calculation methods of economic theory are used.

Calculations are made using the following mutually influencing indicators:

• fixed costs;
• variable costs;
• income;
• output volume.

The indicators listed above can be calculated in aggregate or marginal terms. There are two main methods for calculating profit maximization:

1. method total income and costs while maximizing profits;
2. method of marginal revenues and costs for maximizing profits.

In order to understand the characteristics of the behavior of a monopolist firm in terms of profit maximization. Let us consider the essence of a monopoly firm.

Monopoly firms

A monopoly firm is an organization that occupies a large market share and has few substitute products in the market. This firm dominates the market and can set prices.

Note 1

Monopoly is the opposite of perfect competition.

There are the following reasons why monopolies are formed:

• unique products are produced that have no analogues;
• lower production costs appear, a connection with economies of scale;
• there is a unique right to use any resources: natural resources, labor, capital;
• There are state licenses, licenses that provide the right to inventions, trademarks, know-how.

Note 2

All the above prerequisites help a firm become dominant in the market. And also such factors act as an obstacle for other organizations that are not monopolists and seek to gain market share.

Features of profit maximization in a monopolist company

Let's consider what features appear when maximizing profits in a monopolist company.

In order to obtain maximum profit, an organization needs to achieve a volume of output at which the value of marginal revenue equals the value of marginal cost.

Look at diagram 1 below.

The market demand line, designated $D$, is the line of average income of a monopoly organization. The value of $P$ is the price of one unit of output received by the monopolist firm, and this value is also a function of output volume. $MR$ in Chart 1 is marginal revenue and $MC$ is marginal cost.

The diagram shows that equality of marginal revenue and marginal costs is achieved at the production level - $QM$. Using the demand line $D$, it is possible to find the price $P$ that corresponds to $QM$. Look at diagram 2 below.

The diagram shows that when the output volume becomes higher (lower) than $Q_M$, the firm receives less profit. This happens because at $Q_1$

When the value $Q2$ > $QM$, the decrease in profit is associated with the release of a large amount of product, but with sales at a low price ($P_2$).

Therefore, in order to maximize profits, a monopoly firm always chooses the output level when $MC = MR$. Also, this point of intersection of lines is called the Cournot point.

Therefore, a monopolist firm will usually produce less than could be produced under conditions of perfect competition, however, sales prices will be set higher. Monopoly does not always guarantee the greatest profits. The firm will suffer losses if demand is insufficient. This is how a monopoly firm behaves in the short term.

However, in the long run, equilibrium can be achieved in conditions of output at a level below the volume value at the point $LACmin$, but also with output that exceeds the minimum of the $LAC$ curve. This can be seen in Figure 2. Long-run profit-maximizing prices are lower than short-run profit-maximizing prices. This situation occurs because the demand for the manufactured product is more elastic in the long run.

1. Pure (perfect) competition. Large quantity firms produce similar products, no individual firm can influence the market price. An individual firm's demand curve is a horizontal line. For the entire market, the demand curve has a negative slope.

2. Pure (absolute) monopoly. The only manufacturer of the product. The product has no close substitutes. The boundaries of the industry and the company coincide. The demand curve has a negative slope.

3. Monopolistic competition. There are many manufacturers, but there is product differentiation. The demand curve has a negative slope.

4. Monopsony. There is only one buyer who sets the price.

5. Bilateral monopoly: one buyer, one seller.

6. Oligopoly: A small number of large firms produce the majority of the market's output. Duopoly – two producers. A special case of oligopoly.

The manufacturer is not interested in profit per unit of production, but in maximum total mass profit received. In conditions of free competition, the manufacturer cannot influence the level of the market price and sells any quantity of its products at the same price. Hence, additional income from the sale of an additional unit of production will be the same for any volume and will be equal to the price. Thus, to determine the point where the firm maximizes its profit, it is necessary to determine the firm's equilibrium point, i.e. the point where it stops increasing production, having achieved the maximum possible profit at a given price. As long as marginal cost is less than marginal revenue, the firm can expand production. Thus, the equilibrium condition of the firm can be formulated as follows.MR=P=MC

The shaded rectangle is the firm's gross profit!

There are two ways to solve the problem of profit maximization in conditions of imperfect competition:

· By comparing gross income and gross costs. As the price decreases, gross income increases to a certain level reaching a maximum value. The monopolist reduces the price, but expands production. But starting from a certain price, gross income begins to decline, since the loss from the price reduction is no longer compensated by the gain from expanding sales. Maximum total profit will be achieved when the difference between gross revenue and gross costs is maximum.

· Method of comparing marginal costs and marginal revenue. Under imperfect competition, marginal revenue is less than price. After all, in order to sell an additional unit of output, an imperfect competitor reduces the price. Following the demand curve, the monopolist can reduce the price and increase sales. However, he can reduce the price only to the point where marginal revenue equals marginal cost. It is in this case that the amount of profit will be maximum. Under conditions of imperfect competition, the firm's equilibrium is achieved at the level of production at which average costs reach their minimum. The price is higher than average costs: (MC=MR)

(small rectangle of vertices P 1 and E 1 – monopoly profit)

Dead loss – triangle EE 1 E 2. Due to inflated prices, part of the consumer's surplus is eaten up, part of it goes to the monopolist, and part, like part of the producer's surplus, goes to no one, and represents the destroyed wealth of society.

Types of imperfect competition (pure monopoly, oligopoly, monopolistic competition). The degree of market concentration and its measurement (Lerner index, Herfindahl index). Pricing policy of an oligopolist (prisoner's dilemma).

Economists such as Antoine Cournot, Edward Chamberlin, Joan Robinson, John Hicks and others made outstanding contributions to the analysis of imperfectly competitive markets.

In reality, there is no only perfect competition or only pure (absolute) monopoly. We observe a mixture of various elements of the market structures discussed in the table.

The problem of entry barriers was first discussed in the works of the American economist Joe Bain. An entry barrier to entering a market is a condition that makes it difficult for new firms to enter an industry where the “old-timers” of the industry operate. The main types of entry barriers include the following:

1. The government gives the company exclusive rights (issuing a government license for a certain type of activity, for example, postal service, cable television, transportation services). Many of these types of barriers are closely related to the activities of natural monopolies.

2. Ownership of non-renewable and rare resources. A classic example is the power of De Beers in the diamond market.

3. Copyrights and patents. A company whose activities are protected by a patent has the exclusive right to sell licenses, and this gives it monopoly advantages. Often this type of monopoly is called a closed monopoly, as opposed to an open monopoly, which does not have protection from competition in the form of patents, copyrights, or the benefits of a natural monopoly.

4. Economies of scale, i.e., the advantages of large-scale production, which make it possible to reduce costs while increasing the volume of output.

5. Illegal methods of fighting new potential competitors, up to the threat of physical destruction (mafia structures), can also hinder entry into the industry.

To measure the degree of monopoly power, the Lerner index (English economist proposed this indicator in the 30s of the 20th century):

L=(P-MC)/P the greater the gap between price and marginal cost, the greater the degree of monopoly power. (0

The Herfindahl index (H) shows the degree of market concentration and is calculated by summing the squares of the market shares of each firm in the industry. In the case of a monopoly H=10000, the lower the H, the higher the concentration.

In the case of an oligopoly, competition is non-price. The number of oligopolists depends on the technology that determines the min. The scale of production beginning to make a profit.

The price behavior of oligopolists is constrained by interdependence. The situation is similar to the "prisoner's dilemma". Let's say two prisoners X and Y are accused of a joint crime, which is punishable by 10 years in prison. But, if one confesses and blames the other for the crime, he will only get 3 years. If both confess, then both will be given 5 years. If both deny everything, they will be released. They can't come to an agreement.

Possible solutions:

It is rational to count on the worst case scenario (that your partner will confess) and confess. Then both will get 5 years.

Two equilibrium solutions. Pareto efficient, maximizing the utility of each when both are unaware. Nash equilibrium, when no one can change their position unilaterally (when both confessed). The same is true in the case of oligopoly.

There are 2 firms A and B in the market: if they come to an agreement and set high prices, they will receive a profit of 100. If one unilaterally violates the agreement, then they receive excess profits. And if both decide to cheat each other, then both lose with a profit of only 70. Since they cannot act together, firms make a choice based on the logic of the competitor’s pricing behavior - the result is a Nash equilibrium.

Models of price behavior of oligopolists:

Broken demand curve. Two options for the reaction of oligopolists to price changes on the part of one of them (firm A). 1) do not react. Then the demand line for firm A becomes flatter (elasticity increases). This means that if the price is lowered, it can greatly increase the volume of sales. 2) they will change in the same direction. Then price changes will not affect sales volumes so significantly. In real life, it will most likely be like this: if company A raises the price, then option 1, if it lowers it, then option 2.

Secret conspiracy (cartel) Agreements on leveling or fixing prices, securing the share of product supplies to the market. Each firm receives its own “output quota”.

Leadership in prices. Everyone agrees to follow the leader. The leader firm carefully changes the price, since the success of oligopolists lies in maximizing joint profits.

Pricing based on the cost-plus principle. Price = avg. costs + profit (as a percentage of average costs). It is planned for an average production volume (75-80% of full production capacity). The premium is the average rate of return for the industry in recent years.

Chapter 7 Monopoly

A monopoly is usually understood as a market structure that meets the following conditions:

The production of goods by the entire industry is controlled by only one seller, who is called a monopolist. In other words, a monopolist firm is the only producer of a product and represents the entire industry;

The product produced by the monopolist is special in its kind and has no close substitutes. Accordingly, the demand for a product changes slightly when prices for goods in other industries change, and therefore the cross-elasticity of demand for a monopolized product and products from other sectors of the economy is very low;

The monopoly is completely closed to the entry of new firms into the industry.

These conditions mean that a monopolist firm is able to independently, within certain limits, change the price of the goods sold in any direction (in contrast to perfect competition, in which individual firms cannot influence the price of the goods they produce). Since a monopolist firm acts as an industry, the demand curve for the entire volume of goods produced, i.e. The market (industry) demand curve is also the monopoly demand curve. This means that the firm is a monopolist is obliged to lower the price of the goods produced in order to sell an additional unit of its products. It follows that, unlike perfect competition, in which marginal revenue is also equal to price, under monopoly conditions marginal revenue MR is always less than average revenue AR, i.e. is always less than the price of the product and the marginal revenue curve MR always lies below the AR curve, i.e. below the demand curve.

Equilibrium in the short run. According to universal rule 2, operating in any market structure, a firm produces such quantity q of goods at which MR = MC. A monopolist firm will also strive to fulfill this condition; the price of the product will be determined by the demand for the product of the monopolist firm (the demand curve). It is easier to reveal the dependence of the price of a product produced by a monopolist on output volumes using the appropriate graphs.

Rice. 15. Profit maximization by a monopoly firm

As can be seen from Fig. 15, the firm produces such a volume of goods q e at which MR = MC. The price P e is determined by the corresponding point E 1 on the demand curve D. If the price P e exceeds the average total costs, i.e. is above the ATC curve (Fig. 15a), then the firm receives a profit equal to the shaded rectangle

If the average total costs for producing a volume of goods q e are equal to the price (ATC curve 1 in Fig. 15b), then the firm fully covers the costs of lost opportunities and has zero profit.

When the total costs per unit of production exceed the price (curve ATC2 in Fig. 15b), the monopolist firm incurs losses (shaded area).

Since for a monopolist firm the MR curve always lies below the demand curve, then, in contrast to perfect competition, where the condition for maximizing profit is equality P = MS, with a monopoly, universal rule 2 (MS = MR) is carried out in the case when marginal cost is less than the price of the product (MC< Р) and the point of intersection of the MC and MR curves is below curve D.

There are usually typical misconceptions regarding the principles of a monopoly. Firstly, there is an opinion that a monopolist firm can set any price for the goods it monopolistically sells. However, the price of the product produced by the monopolist depends on the demand for this product and, for given values ​​of q e (when MC = MR), has a very specific value (P e in Fig. 15) value. Secondly, it is believed that the monopolist sells each unit of goods with maximum profit. But a careful study of Fig. 15a shows that by producing q a units of goods (where total costs per unit of production are minimal), the firm would have a higher profit per unit of production than at point q e (price P a is higher than P e, and average total costs are lower).

Consequently, the monopolist maximizes total profit by increasing output to q e: while losing “specific” profit (per unit of production), he increases total profit by expanding production volumes. Finally, thirdly, from the point of view of the average person, a monopolist necessarily has a profit. However, it is obvious that the success of a monopolist depends entirely on the objective market situation: changes in demand, rising costs due to increased resource prices can lead to the situation reflected in Fig. 15b, when the monopolist incurs losses. Consequently, monopolization of an industry does not mean that the monopolist will make a profit.

Equilibrium of a monopolist firm in the long run. If a firm is a monopolist, then it represents an industry, and the conditions of profit maximization for an individual monopolist firm apply to the entire industry. Undoubtedly, the profit received by a monopolist firm will attract other firms to the industry. Therefore, the monopolist will ensure equilibrium in the long run only if he can keep the industry he controls from penetration by other firms.

The obstacles that a monopolist puts forward to the entry of other firms into the industry are called entry barriers.

Barriers are divided into natural And artificial.

Natural arise when a firm or group of firms manages to achieve low average costs in the long run, which makes it possible to push other firms out of the industry. Natural barriers are also created when the conditions of demand for an industry product allow only one firm to remain in the industry. Finally, there is a natural barrier associated with the difficulty of entering the industry: monopolized industries, as a rule, have a significant volume of output, so in order for a new company to enter the industry, it needs to make more investments, train qualified personnel, create a sales system, etc. This often leads to serious costs, which stops potential manufacturers of this product from entering the industry.

Artificially created barriers may arise through purely institutional means, for example due to government actions. In particular, guaranteeing patent rights to an invention, granting special privileges (usually various types of licenses), ensuring the secrecy of individual developments, and control over the expenditure of important strategic raw materials can provide individual firms with the opportunity to monopolize the industry. Another nature of artificial barriers is dishonest targeted actions of monopolistic firms themselves: threat of force to potential competitors, pressure on resource owners, etc.

Due to the fact that the monopolist necessarily reduces production volumes to a level below potential ones in order to obtain monopoly profits, under the conditions of this market structure economic resources are used inefficiently. Therefore, many countries, including Russia, are adopting antimonopoly legislation.

In the system of economic relations there are natural monopolies. Traditionally, a monopoly is interpreted as a market situation characterized by production conditions that provide economies of scale, as well as technological reliability and availability of services to the consumer.

In Russia, in accordance with the Federal Law, a natural monopoly is considered as “a state of the commodity market in which the satisfaction of demand in this market is more effective in the absence of competition due to the technological features of production, and the goods produced by the subjects of the natural monopoly cannot be replaced in consumption by other goods, in therefore, the demand in a given product market is less dependent on changes in the price of the product than the demand for other types of goods.” Natural monopolies in Russia are regulated in the following areas:

Transportation of oil and petroleum products via main pipelines;

Gas transportation through pipelines;

Rail transportation;

Services of transport terminals, ports, airports;

Public electric and postal communication services.

Almost all countries with developed economies are reforming natural monopolies, aimed at creating a competitive environment, reducing costs and prices, and generally increasing the efficiency of these sectors of the economy. Russia is also reforming natural monopolies.

(Materials are based on: V.F. Maksimova, L.V. Goryainova. Microeconomics. Educational and methodological complex. - M.: Publishing center of the EAOI, 2008. ISBN 978-5-374-00064-1)

Discriminatory prices, conditions and principles of their formation.

3. Pricing strategies in a monopolistic market.

Profits and losses under monopoly conditions. Conditions for profit maximization and equilibrium in a monopolistic market.

The equilibrium condition of the firm in the short run: M.R. =M.C. .

In Fig. Figure 26 shows the equilibrium points of a monopolist firm - point A and the point at which profit is maximized is the point IN .

Rice. 26. Points of balance and maximum profit.

Example. Consider the following table and find the maximum profit value of a monopolist firm:

Q	P	TR	TC	M.C.	M.R.	A.C.	P

Profit is maximum at P = 122,Q = 5.M.C. =M.R.

• – a condition for maximizing profit in the short term, M.R. AR,M.R. R
• – additional conditions for maximizing profits in a monopoly market.

A firm maximizing profit under monopoly conditions simultaneously determines two parameters: output volume and price, taking into account the form of its cost function and a demand curve with a negative slope. To determine the price under monopoly conditions, they often use "big ring" rule why you need to know M.C. and price elasticity of demand E R (D ) :

Task. Given: E R (D ) = -4,MS = 9. Find the price value.

Solution. rub./piece

Task. Based on this table, find and build graphs M.R. , AR And TR .

Solution. From the table it is clear that P = 6 – Q . Because TR =PQ , then we get:

Based on these equations, we will construct a graph:

At a certain price elasticity of demand, the lower part of the curve M.R. falls below the axis Q , so the monopolist will not be interested in operating in the highly elastic portions of the demand curve. Depending on the location of the price, average costs AVC and marginal costs, a monopolist can either have a profit (Fig. 27a), or a normal profit, or a loss (Fig. 27b).

Rice. 27. Profits and losses of a monopolist firm.

The indicator of monopoly power is determined through price and marginal costs ( Lerner exponent):

where 0< L < 1.

To set prices under monopoly conditions, determine:

market demand characteristics;

firm costs ( A.C. , AVC , M.C. );

production volume;

price that maximizes profit.

The monopolist does not charge the highest price, since profit may not be maximum in this case.

For a monopolist, what is important is not the profit per unit of output, but the maximum total profit.

A monopolist may experience losses due to falling demand and high costs.

The monopolist avoids the region of elastic demand.

A monopolist can reduce production and increase price.

A monopolist can increase its profits by introducing discrimination or the so-called. discriminatory prices.

For a monopolist, it is impossible to construct one supply curve, since at the same equilibrium point there may be several demand curves, and, consequently, several different prices.