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Why is it impossible for a profit-maximizing monopolist to choose any price and any quantity it wishes?
Wiki User
∙ 10y ago
The monopolist can choose either the price or the quantity, but choosing one determines the other - they come in pairs.
Wiki User
∙ 10y ago
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When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
In a monopoly why is the marginal revenue curve always below the demand curve?
because price and output are related by the demand function in a monopoly. it is the same thing to choose optimal price or to choose the optimal output. even though the monopolist is assumed to set price and consumers choose quantity as a function of price, we can think of the monopolist as choosing the optimal quantity it wants consumers to buy and then setting the corresponding price. OR in simpler terms Because AR (demand) is downward sloping - (see equi-marginal rule or Law of Equi-Marginal Utility). To sell one more unit of output, the firm must lower its price, meaning that the revenue received is less than that received for the previous unit (marginal revenue received for unit 2 is less than that for unit 1). Therefor the marginal revenue will be less than the average revenue. Unit 1 sold for $5 Marginal revenue=$5 Average Revenue=$5 Unit 2 sold for $4 Marginal revenue=$4 Average Revenue=$4.50 ($5+$4/2)
Impossible trinity in economics?
The 'impossible trinity' is the combination of free capital mobility, a fixed exchange rate and independent monetary policy. Countries can choose any two of these three but achieving all three is impossible e.g. the UK has free capital mobility and independent monetary policy but a floating echange rate and China has independent monetary policy and a fixed exchange rate but restrictions on the movement of capital.
''Rising oil prices have caused a sharp decrease in the demand for oil.'' Speaking precisely and using terms as they defined by economists choose the statement that describes this quotes?
The quotation is incorrect: An increase in price causes a decrease in the quantity demanded, not a decrease in demand.
What is the primary gain from international trade?
In theoretical economics, for gains from trade we distinguish between (a) A small country trading with RoW (Rest of the World), where the former is a price taker and cannot influence world prices, the maximum it can do is exchange at world prices. For a closed small economy by opening up to trade and partially specialise in its comparative advantage (cost advantage) helps to exchange more of the non-comparative advantage commodity from the world, thus taking the country to a higher utility schedule. Ex: For a production of clothing and food, say small country has a comparative advantage in food production, while the Row in clothing, thus small country can choose to produce food which it can more efficiently and then exchange it for clothing from RoW. Thus for a small country consumer more of both is available, raising utility. (b) A large country trading with RoW, here the large country is a monopolist concerned with supply, and also affects world demand with its large demand for imports, hence a monopolist would choose not to operate at (a) P=MC and (b) remain on the inelastic part of the demand curve and hence resorting to an optimal tariff bound trade that takes it to the maximum utility. This is easy to understand and involves a derivation, but this is the essential introduction.
When can monopolist earn an economic profit?
A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.
In a monopoly why is the marginal revenue curve always below the demand curve?
because price and output are related by the demand function in a monopoly. it is the same thing to choose optimal price or to choose the optimal output. even though the monopolist is assumed to set price and consumers choose quantity as a function of price, we can think of the monopolist as choosing the optimal quantity it wants consumers to buy and then setting the corresponding price. OR in simpler terms Because AR (demand) is downward sloping - (see equi-marginal rule or Law of Equi-Marginal Utility). To sell one more unit of output, the firm must lower its price, meaning that the revenue received is less than that received for the previous unit (marginal revenue received for unit 2 is less than that for unit 1). Therefor the marginal revenue will be less than the average revenue. Unit 1 sold for $5 Marginal revenue=$5 Average Revenue=$5 Unit 2 sold for $4 Marginal revenue=$4 Average Revenue=$4.50 ($5+$4/2)
What is the name of the main military leader of asia?
There are so many countries in Asia, each with their own military it is impossible to choose a "main military leader".There are so many countries in Asia, each with their own military it is impossible to choose a "main military leader".
Choose the appropriate unit of measure.?
The answer will depend on what quantity is being measured. Since that has not been specified, there can be no sensible answer.
Is it correct to say now you have a SLEUTH of items to choose from?
No, I think you mean that you have a SLEW of items to choose from.A sleuth is a person investigating sneakily. A slew is a large quantity.
When you are asked to construct a graph that represents one quantity in terms of another quantity how do you know which quantity to place as a label on which axes?
You get one (first) quantity by itself in terms of another(second) and by convention that first quantity is on the y axis and the second on the x. It does not make any difference which quantity you choose to be by itself. For example, suppose the first quantity is D for dollars and the second is C for cents and D = 100C You plot D on the y axis and C on the x However you could choose to get C by itself as C = D/100 and plot C on the y axis and D on the x So you need not worry about which quantity, just get any one by itself and plot on the y axis
What does more than mean?
This is a simple one, it basically means that whatever quantity is stated is equal to the amount specified or less. eg. What is the probability that a boy chooses no more than 7 marbles.(this is basically saying that the boy is going to choose 7 marbles or less). Hope i helped
What is the answer to question 80 in the impossible quiz?
The Impossible Quiz? Question 80? You mean "Sell your liver to..." Choose "Filthy Romanians" My God that sounds rasict.
What is the answer to question 10 in the impossible quiz?
False Teeth (Choose Food = Chews Food).
What is the mathematical function to determine how many combinations there are?
With (n) things to choose from, and you choose a quantity (r) of them [like a lottery]: the formula is: n! / (r!(n-r)!) See related link.
Why you choose quantity surveying as your course?
I liked building things as a kid and was always good with number; therefore this profession seemed i deal for me
What to do if you have to choose between your marriage and another guy?
As we do not know the circumstances it is impossible to say. You must do what you feel best.
