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In a monopoly, price is determined by the monopolist's ability to set the price above marginal cost, as there are no direct competitors. The monopolist maximizes profits by producing the quantity of output where marginal revenue equals marginal cost. This typically results in a higher price and lower quantity sold compared to a competitive market, allowing the monopolist to capture consumer surplus as profit. The price is then set on the demand curve at the quantity produced, reflecting the highest price consumers are willing to pay for that quantity.
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What is the position of supernormal profits for a firm that is a monopoly?
true
Excessive monopoly profits represent?
Note: 'Excessive' is not an objective term to use for economics analysis. Monopoly profits usually represent a form of price mark-up, setting MC = MR and then vertically matching the maximum willingness-to-pay for that unit and all units before it on the demand curve. This is socially inefficient but privately optimal.
Can a monopoly earn economic profits in the long run?
Yes
Can a monopoly earn economic profits in the short run?
yes it is
What is the main idea of king monopoly cartoon?
The King Monopoly is gaining all the profits from the laborers' hard work
Why doesn't demand equal marginal revenue in a monopoly and how come this discrepancy occurs?
In a monopoly, demand does not equal marginal revenue because the monopoly firm has the power to set prices higher than the marginal revenue. This discrepancy occurs because the monopoly has control over the market and can influence prices to maximize profits, unlike in a competitive market where prices are determined by supply and demand forces.
How does a monopoly increases a corporations profits?
by eliminating competition to control prices
What factors contribute to the sustainability of monopoly profits in the long run?
Factors that contribute to the sustainability of monopoly profits in the long run include barriers to entry, economies of scale, control over scarce resources, and strong brand loyalty.
A cartel differs from a monopoly in that?
a cartel is a group that agrees to charge monopoly price and quantity, splitting quantity amongst themselves. so a monopoly is one company and a cartel is a group. Profits are lower for cartel members because they only produce a total quantity that is equal to a monopolists production. novanet-businesses making the same product agree to limit production
What does the booty in the cartoon king monopoly' represent?
Excess profits piling up from tariffs and business combinations.
Does a monopoly produce at the inelastic or elastic part of the demand curve?
A monopoly produces at the elastic portion of the demand curve. If producing at the inelastic portion of the deman curve, the monopoly could lower the quantity produced and raise the price to achieve more total revenue.
Will a monopoly always produce at a profit-maximizing level of output?
Most businesses aim to operate at its profit-maximizing level at all times, but many factors make this nearly impossible. For instance, if they are short on workers they wouldn't be able to maximize profits.
