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Chapter 24: Q. 12 (page 554)

Demand has fallen. What is going to happen to the monopolist's price, output rate, and economic profits?

Short Answer

Expert verified

Long-run input prices have neither dropped nor remained constant. Since variable costs have dipped with consistent or dipped costs in the long run, economic profits have resulted.

Step by step solution

01

Introduction.

The monopolist will select the much more profitable volume of production and afterwards charge the market growth curve price for that amount of output. If that price is higher than the average cost, the monopolist makes a profit.

An financial profit or loss is described as the variation between both the income generated from the sale of such an output and the ends up costing of all input data used, and any opportunity costs.

02

Given Information.

The given information are as follows:

Demand has decreased.

03

Result of the Fall in demand.

The industry has been viewed as a low-cost industry.

Long-run input prices have neither dropped nor remained constant. Since variable costs have dipped with consistent or dipped costs in the long run, economic profits have resulted.

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