Principles of Economics by Carl Menger Chapter 5.2C - Market Dynamics of Monopoly Pricing

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How does a monopolist’s choice of price affect how much they sell and who gets to buy? In this video, we explore Carl Menger’s Principles of Economics, Chapter 5.2C: The Influence of Monopolist-Set Prices on Quantities Sold and Buyer Distribution.
In most real markets, monopolists don’t run auctions. Instead, they set a fixed price for their goods and let buyers choose how much to purchase. This practical method shapes the entire outcome of trade: who can buy, how much is sold, and how broadly the good spreads through the market.
Menger explains that if the price is too high, even the most eager buyer won’t purchase—and no sales happen. But if the price is reasonable, buyers will begin to purchase according to how much value each unit holds for them.
For example:
If the price is 75 units of grain, only the top buyer purchases one unit.
Lowering it to 62 units brings in another buyer and more sales.
Dropping to 54 units opens the market even more—more buyers, more units sold.
The core principles are simple but powerful:
1️⃣ Buyers whose valuation is below or equal to the price won’t buy.
2️⃣ Buyers whose valuation is above the price will buy up to their personal limit.
3️⃣ Lower prices increase participation and sales; higher prices do the opposite.
This dynamic explains why pricing decisions matter so much—not only for profits but also for how goods flow through society.

❓ Questions This Video Answers:
-How does a monopolist typically sell their goods?
-Why do high prices exclude buyers?
-What happens to total sales when prices are lowered?
-How do buyers decide how much to buy?
-What role does marginal utility play in purchase decisions?
-Why doesn’t a monopolist always set the highest price possible?
-How does price affect the distribution of goods in society?
-Why do lower prices reach deeper population groups?
-What is the relationship between set price and buyer participation?
-How does this model explain real-world monopoly pricing?

00:00 - Introduction to The Influence of Monopolist-Set Prices on the Quantities of the Monopoly Good
00:18 - Monopolist Pricing Strategies and Market Dynamics
01:19 - Impact of Price on Buyer Participation and Sales Volume
02:17 - Principles Governing Monopolist Pricing and Market Reach
03:15 - Conclusion

#MonopolyPricing #BuyerBehavior #CarlMenger