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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.
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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.
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
If all firms only earn a normal profit in the long run firms will develop new products or lower-cost production methods because they can?
Innovate and possibly earn an economic profit in the short run.
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
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.
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.
What is goals for franchise for short terms?
To simply earn profit for the purpose of economic goal.
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
If all firms only earn a normal profit in the long run firms will develop new products or lower-cost production methods because they can?
Innovate and possibly earn an economic profit in the short run.
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
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.
Is economic profit always less than accounting profit?
No economic profit is not always less than accounting profit; However, if accounting profit is less than economic profit the business would exit the industry.
Can a monopolistic competitive firm earn long run profit?
In the long run, if a firm is making a profit more firms will enter. This will cause profit to drop. Firms will eventually drop out because of this and economic profit will makes it way to zero(a result of the invisible hand).
The price charged by a profit-maximizing monopolist occurs at?
the point where the marginal cost curve intersects the marginal revenue curve
2 Does the fact that a firm is a monopolist ensure that it will be able to earn positive economic profits Why or why not?
No. It depends on the monopolistic firm. If the firm is a monopolist because it has lowered its prices on products so low to drain out the competition and force the other firms to exit the market, it may not be profiting at all and it may be losing money instead. However, in the long run a monopolistic firm can be profitable because when all firms exit the market it has the ability to raise prices to pay for any loss it may have experienced by lowering prices in the earlier part of its monopolistic strategy. A firm that is a monopolist in a market may never see profitability. It all depends on the monopolist's ability to defend its product that it takes to market. Also, a firm isn't ever guaranteed positive economic profit. The demand might cease at any time and the firm might find itself in a never ending loss scenerio.
