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What is monopolist's marginal revenues less than the price of its goods?
Wiki User
∙ 13y ago
because the monopolist firms are price maker and they can set any price they want and the customers are not perfect knowleged
Wiki User
∙ 11y ago
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What is the relationship between marginal utility and demand?
There is a close relationship between the marginal utility and price of a commodity.The additional satisfaction from the consumption of an additional unit of the commodity is called marginal utilty. Price means the value of the goods expressed in the terms of money.Price of all units of he same goods of consumption are more or less identical.It means that the consumer pays the same price for all the units of the same goods of consumption. But marginal utility of the goods of consumption start diminishing as the consumer increase the units of consumption of the commodity.Therefore the consumer will like to pay that price for the commodity,which is equal to the marginal utility he gets from the commodity.If the price of the commodity are higher than the marginal utility he derives from the commodity he will not like to purchase the commodity. In this way there is a clod\se relation between the marginal utility and the price of the commodity.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Why do the demand and marginal revenue curves coincide?
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
How does the controller of a monopoly set price of goods?
the monopolist produces at a point where marginal revenue=marginal cost, he uses this quantity, and goes up vertically until the demand curve is met. This quantity is lower than a competitive equilibrium and thus, price is higher as well.
What is the formula to find the marginal cost?
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
What is the relationship between marginal utility and demand?
There is a close relationship between the marginal utility and price of a commodity.The additional satisfaction from the consumption of an additional unit of the commodity is called marginal utilty. Price means the value of the goods expressed in the terms of money.Price of all units of he same goods of consumption are more or less identical.It means that the consumer pays the same price for all the units of the same goods of consumption. But marginal utility of the goods of consumption start diminishing as the consumer increase the units of consumption of the commodity.Therefore the consumer will like to pay that price for the commodity,which is equal to the marginal utility he gets from the commodity.If the price of the commodity are higher than the marginal utility he derives from the commodity he will not like to purchase the commodity. In this way there is a clod\se relation between the marginal utility and the price of the commodity.
How does a monopolistically competitive firm determine its profit-maximizing price?
price = marginal revenue. marginal revenue > average revenue. price > marginal cost. total revenue > marginal co
Why do the demand and marginal revenue curves coincide?
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
How does the controller of a monopoly set price of goods?
the monopolist produces at a point where marginal revenue=marginal cost, he uses this quantity, and goes up vertically until the demand curve is met. This quantity is lower than a competitive equilibrium and thus, price is higher as well.
What is the formula to find the marginal cost?
Marginal Cost = Marginal Revenue, or the derivative of the Total Revenue, which is price x quantity.
If the demand of goods is elastic what should be done with the price in order to realize more revenues?
If the demand for goods are elastic, then small changes in the price will have larger effects on the quantity demanded. In order to realize more revenues, the producer may decrease prices a little, leading to a large increase in the quantity demanded. Eg Price Quantity Demanded Profit Elastic 5 1500 7500 6 1000 6000 Inelastic 5 1100 5500 6 1000 6000
How do you achieve allocative efficiency?
Allocative efficiency is an output level where the price equals the marginal cost of production. This is because the price that consumers are willing to pay is equivalent to the marginal utility that they get. Therefore the optimal distribution is achieved when the marginal utility of the good equals the marginal cost.
How to use the concept of price elasticity of demand to maximize revenue?
Price elasticity of demand is a way to determine marginal revenue. Optimal revenue and, more importantly, optimal profit will occur to the point when marginal revenue = marginal cost, or the price elasticity of demand < 1.
What is the condition of equilibrium for monopolist?
Marginal Revenue = Marginal Cost; mark-up price to the demand curve.
What does the marginal principle of economics state?
The marginal principle will tell us that a firm will maximize it's profits by choosing a quantity at which, price=marginal costs.
What is pricing discrimination?
Price discrimination is the practice of charging the highest price to different consumers. This is so that the firm can maximize the revenue it receives for the goods it produces. Price discrimination is mainly for markets that are monopolistic, or oligopolistic. In these kinds of markets the firm has to decrease price in order to sell more of the good because they are the only supplier. Because of this marginal revenue is derived from the demand but the profit maximization condition is still marginal cost equals marginal benefits but marginal benefits does not equal the demand curve. The firm wants to price discriminate in order to avoid the decreased revenues because of the lost revenue because they have to decrease prices to get more consumers. One of the biggest problems in practicing price discrimination is that the firm needs perfect information in order to maximize the returns to price discrimination. Finding this information could be very costly to obtain, or could be realistically impossible to obtain.
If the market price for a chair is 24 and the marginal cost for the chair is 7 the marginal revenue from the chair would be .?
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