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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.
Why does marginal revenue curve lie below the Demand curve?
Since Marginal revenue refers to the additional revenue earned by a monopolist by increasing the sale by 1 unit ( usually through lowering the price ), the additional revenue earned will always be less since there has been a drop in price.
Why would a perfectly competitive firm shutdown in the short-run if prices is lower than average variable cost but will continue to produce if price is below average total cost but above variable cost?
A perfectly competitive firm will shut down in the short run if the price falls below the average variable cost (AVC) because it cannot cover its variable costs, leading to greater losses than if it ceased production altogether. However, if the price is below average total cost (ATC) but above AVC, the firm can still cover its variable costs and contribute something toward fixed costs, making it more beneficial to continue production in the short run to minimize losses. Thus, the shutdown decision is based on the firm’s ability to cover variable costs rather than total costs.
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)
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
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.
Why does marginal revenue curve lie below the Demand curve?
Since Marginal revenue refers to the additional revenue earned by a monopolist by increasing the sale by 1 unit ( usually through lowering the price ), the additional revenue earned will always be less since there has been a drop in price.
Why would a perfectly competitive firm shutdown in the short-run if prices is lower than average variable cost but will continue to produce if price is below average total cost but above variable cost?
A perfectly competitive firm will shut down in the short run if the price falls below the average variable cost (AVC) because it cannot cover its variable costs, leading to greater losses than if it ceased production altogether. However, if the price is below average total cost (ATC) but above AVC, the firm can still cover its variable costs and contribute something toward fixed costs, making it more beneficial to continue production in the short run to minimize losses. Thus, the shutdown decision is based on the firm’s ability to cover variable costs rather than total costs.
How often the value of a random variable is at or below a certain value?
How often the value of a random variable is at or below a certain value.
How often the value of a random variable is at or below a certain value.?
The probability of a random variable being at or below a certain value is defined as the cumulative distribution function (CDF) of the variable. The CDF gives the probability that the variable takes on a value less than or equal to a given value.
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 independent variable in Todd's experiment?
There is no independent variable for the experiment described below, since there is no experiment described below.
What is the small number below a variable called?
A subscript.
The y-axis on the graph below represents the values taken by the?
By the y variable - whatever that may be. It may be a dependent variable or another independent variable.
Evaluate the variable expression for x equals 4 and enter your answer in the box below?
There is no box below!
Under what conditions will a firm shut down temporarily?
A firm will shut down temporarily when it cannot cover its variable costs with its revenue, typically during periods of low demand or when prices fall below average variable costs. This decision is often made to minimize losses since continuing operations would lead to greater financial strain. Additionally, a firm may choose to shut down if it anticipates prolonged unfavorable market conditions or if operational costs exceed potential revenue for an extended period.
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
