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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.
Why is marginal revenue less than price for a monopolist?
Marginal revenue is less than price for a monopolist because in a monopoly market, the monopolist is the sole seller and has the power to set the price. To sell more units, the monopolist must lower the price, which reduces the revenue gained from each additional unit sold. This results in marginal revenue being less than the price.
What is monopolist's marginal revenues less than the price of its goods?
because the monopolist firms are price maker and they can set any price they want and the customers are not perfect knowleged
What Monopolist can decide?
they decide price and quantity.
Why do companies practice price discrimination?
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more. Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)
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.
Why is marginal revenue less than price for a monopolist?
Marginal revenue is less than price for a monopolist because in a monopoly market, the monopolist is the sole seller and has the power to set the price. To sell more units, the monopolist must lower the price, which reduces the revenue gained from each additional unit sold. This results in marginal revenue being less than the price.
What is monopolist's marginal revenues less than the price of its goods?
because the monopolist firms are price maker and they can set any price they want and the customers are not perfect knowleged
What Monopolist can decide?
they decide price and quantity.
Why do companies practice price discrimination?
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more. Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)
Why do companies practice discrimination?
Price discrimination is based on the idea that each customer has his or her own maximum price he or she will pay for a good. If a monopolist sets the good's price at the highest maximum price of all the buyers in the market, the monopolist will only sell to the one customer willing to pay that much. If the monopolist sets a low price, the monopolist will gain a lot of customers, but the monopolist will lose the profits it could have made from the customers who bought at the low price but were willing to pay more. Price discrimination recognizes that groups of consumers are willing and able to pay different amounts for a good. (gradpoint)
What is the relationship between price and marginal revenue when a monopolist cuts the price to sell more?
Between them exist a simple line of difference, a monopolist can sale more with less money CHACHA!
Why is it impossible for a profit-maximizing monopolist to choose any price and any quantity it wishes?
The monopolist can choose either the price or the quantity, but choosing one determines the other - they come in pairs.
How does a perfectly price-discriminating monopolist maximize profits by charging different prices to different customers based on their willingness to pay?
A perfectly price-discriminating monopolist maximizes profits by charging each customer the highest price they are willing to pay. This allows the monopolist to capture all of the consumer surplus and maximize revenue.
Effect of a monopolist's price increase?
If a monopolist raises his prices above marginal cost, he will increase his profits. This seems like a good thing for the monopolist. However, the down side is that it reduces the well-being of consumers. Most times, the harm to consumers is greater than the gain of the monopolist.
Is the monopolist's demand curve elastic or inelastic?
The monopolist's demand curve is typically inelastic, meaning that changes in price do not have a significant impact on the quantity demanded by consumers.
Will a monopolist charge a lower price where demand is price elastic and a higher price where demand is price inelastic?
Yes. A monopolist would tend to charge a price closer to fair market value when the demand for a good is elastic. If not demand would be affected. With a monopoly controlled inelastic good the consumer has no recourse and there for would be and the mercy of the supplier.
