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Monopolist profit refers to the excess earnings that a monopolistic firm generates by being the sole provider of a good or service in a market. Unlike firms in competitive markets, a monopolist can set prices above marginal costs, leading to higher profit margins. This profit arises from the lack of competition, allowing the monopolist to control supply and influence prices. Ultimately, monopolist profit can result in market inefficiencies and reduced consumer welfare.
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What does a monopolist competition do to maximize its profit?
If a company or organisation is a monopoly it has no competition. Therefore it can do anything it wishes to maximize its profit
The demand curve for a monopolist differs from the demand curve faced by a competitive firm?
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
(a)Which of the following is true (A)A monopolist produces on the inelastic portion of its demand. (B)A monopolist always earns an economic profit. (C)The more inelastic the demand the closer marg?
(A) A monopolist produces on the inelastic portion of its demand. This is true because a monopolist maximizes profit where marginal revenue equals marginal cost, and inelastic demand allows the monopolist to raise prices without losing too many customers. However, (B) is not necessarily true, as a monopolist can incur losses in the short run, and (C) is incomplete, but typically, the more inelastic the demand, the closer marginal revenue will be to price.
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.
A profit maximizing monopolist with a positive marginal cost of production will always?
Produce in the elastic range of the demand curve
What does a monopolist competition do to maximize its profit?
If a company or organisation is a monopoly it has no competition. Therefore it can do anything it wishes to maximize its profit
The demand curve for a monopolist differs from the demand curve faced by a competitive firm?
The pure monopolist's market situation differs from that of a competitive firm in that the monopolist's demand curve is downsloping, causing the marginal-revenue curve to lie below the demand curve. Like the competitive seller, the pure monopolist will maximize profit by equating marginal revenue and marginal cost. Barriers to entry may permit a monopolist to acquire economic profit even in the long run.
(a)Which of the following is true (A)A monopolist produces on the inelastic portion of its demand. (B)A monopolist always earns an economic profit. (C)The more inelastic the demand the closer marg?
(A) A monopolist produces on the inelastic portion of its demand. This is true because a monopolist maximizes profit where marginal revenue equals marginal cost, and inelastic demand allows the monopolist to raise prices without losing too many customers. However, (B) is not necessarily true, as a monopolist can incur losses in the short run, and (C) is incomplete, but typically, the more inelastic the demand, the closer marginal revenue will be to price.
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.
A profit maximizing monopolist with a positive marginal cost of production will always?
Produce in the elastic range of the demand curve
Why will the profit maximizing monopolist never operate on the inelastic portion of its demand curve?
A profit-maximizing monopolist will never operate on the inelastic portion of its demand curve because, in that range, increasing the price leads to a decrease in total revenue. Since demand is inelastic, a price increase results in a proportionally smaller decrease in quantity demanded, causing total revenue to fall. To maximize profit, the monopolist will only produce where demand is elastic, where price increases would lead to higher total revenue. Thus, operating on the inelastic portion would be counterproductive to profit maximization.
How do you find a monopolist's profit maximising...?
The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.
The price charged by a profit-maximizing monopolist occurs at?
the point where the marginal cost curve intersects the marginal revenue curve
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.
How does a monopolist decide how much product to make?
A monopolist decides how much product to produce by determining the profit-maximizing output level, where marginal cost (MC) equals marginal revenue (MR). Unlike firms in competitive markets, a monopolist faces a downward-sloping demand curve, meaning it can influence the market price by adjusting production levels. The monopolist will produce less than the socially optimal quantity, leading to higher prices and reduced consumer surplus compared to competitive markets. Ultimately, the goal is to maximize economic profit rather than total output.
Can a monopoly practice price discrimination?
The monopolist pricing condition occurs where marginal cost equals marginal revenue. The monopolist does not follow usual demand or supply curves. It instead optimises its total profit by setting its production decision (aka - how many units) to where the marginal profit of the last unit equals 0, then 'marking-up' the price by setting it directly above this equilibrium on the original demand curve. The total profit derived from this condition is called the monopolist profit.
What is the profit maximizing decision a perfectly competitive firm makes in the short run and explain why this firm can make profits in the short run but not in the long run?
A perfectly competitive firm maximizes profit in the short run by producing the quantity where marginal cost equals marginal revenue. In the short run, firms can make profits due to price fluctuations and temporary market conditions, but in the long run, new firms can easily enter the market, increasing competition and driving down prices to the point where economic profits are reduced to zero.
