• Monopolies are a key part of the pricing system.

    Monopolies can modify relative prices taking part of everybody else's flows of income. This changes don't constitute inflation in itself, but, changes in relative prices don't occur without affecting de general level of prices in a rising way. Significant changes in relative prices occurs periodically producing inflation cycles. In this sense, monopolies can undermine the purchase capacity of money. It is inflation.

  • Monopoly cause inflation!

    When an monopoly occurs, they have total control of the prici the product cheaper. If there is no compeition, then the monopoly will rise the price so they can maximumize profit, which will cause inflation. Your basic utilities, such as water is a monoply, and the city can charge and do what they want within state guidelines for consumers.

  • Monopolies Cheat Supply & Demand

    Monopolies get to charge exorbitant prices because consumers have nowhere else to go. Even if theoretically a competitor should be able to come along and sell at the much lower "equilibrium price" they don't, because they know the monopoly will just temporarily price their products below the equilibrium and operate at a loss for a short time until their new competitor goes out of business.

  • Inflation is caused by a excess of money

    1) the motivation of the monopolist is to maximize his profits.
    2) The income is price x quantity
    3) If the price raises, the quantities decreases (demand curve).

    The 3) establish the monopolist can't rise the price at any level if he is subject to 1) because he must to see the price and the quantities sales at each price.
    Suppose he rise a 10 percent the price and then the quantities decreases only 5%. Obviously his income rises, then, he rises the price.
    But suppose at this new level if he raises the price another 10% the quantities decrease 15%. Now is not convenient to rise the price.
    The higher price is, the greater the drop in the quantities sold at a price increase.
    The monopolist will maximize his income at the level price where if he raises the price 1% the quantities decrease exactly 1%.

    Monopolist will adjust the price at his market at level what maximizes his profit. He has no motivation to increase it far beyond this level, because his profits will decrease at higher prices (because the quantities will decrease dramatically).

    Once fixed this price there are no reasons to rise the price. This is the reason because he can't make inflation.

    The monopoly price is higher than a free market price (and this is really bad), but the monopolist don't create inflation.

  • Supply and Demand

    Inflation, by definition, is "a rise in the general level of prices of goods and services in an economy over a period of time". While it could justifiably be said that it is caused by a monopoly ownership (he who has the supply has the power), it doesn't need to be just one person holding the item in demand. As long as the demand is greater than the supply, the prices will go up.

    Posted by: Misa
  • I think inflation is caused by buyer demands.

    I think that all companies feel an element of greed when their product sells quite well. It causes them to create consumer demands and to drive up their prices. I don't think that monopoly power has anything to do with the economy and what causes inflated prices. I think that hardships also cause inflation.

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