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Chapter 24: Q. 24.2LO (page 535)

Describe the demand and marginal revenue conditions a monopolist faces.

Short Answer

Expert verified

Because this single business increases its supply, its yield does not have to remain constant. The monopolist's supplier margin is the profits growth region, and the businessperson is the long-term income development customers.

Step by step solution

01

Introduction

  • The monopolist is the market's sole provider, and the monopolist's demand curve is the market demand curve.
  • The market demand curve, as you may recall, is downward sloping, reflecting the law of demand..
02

Given Information

Because the monopolist faces a downward sloping demand curve, the value a monopolist might anticipate to obtain is lower.

03

Explanation

  • Viewpoint on stock valuation. Unlike a superbly competitive firm, the monopolist doesn't should simply take the value as given.
  • Instead, the monopolist may be a price searcher; it searches the market demand curve for the profit maximizing price.
  • The single firm evaluates the marginal costs to really get the money cost. and monetary value related to each possible price‐output combination on the market demand curve.

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Most popular questions from this chapter

Currently, a monopolist's profit-maximizing output is 200units per week. It sells its output at a price of \(60per unit and collects \)30 per unit in revenues from the sale of the last unit produced each week. The firm's total costs each week are $9,000. Given this information, what are the firm's maximized weekly economic profits and its marginal cost?

Consider the information from Problems 24-13. If the total costs of producing 13 units were equal to $72.70 per week, would the marginal revenue of producing the 13 th unit (your answer to Problem 24-13) be greater or less than the marginal cost of producing that unit? How would the firm's weekly economic profits be affected if the firm were to produce the 13 th unit?

Look again at Figure 24-5. Suppose that Q2 is equal to 35 units of output per time period. If the vertical distance to point C is \(6 per unit and the vertical distance to point B is \)3 per unit, then by how much does producing the 35 th unit of output affect the firm's economic profits?

A new competitor enters the industry and competes with a second firm, which had been a monopolist. The second firm finds that although demand is not perfectly elastic, it is now more elastic. What will happen to the second firm's marginal revenue curve and to its profit-maximizing price?

For each of the following examples, explain how and why a monopoly would try to price discriminate.

a. Air transport for businesspeople and tourists

b. Serving food on weekdays to businesspeople and retired people- (Hint: Which group has more flexibility during a weekday to adjust to a price change and, hence, a higher price elasticity of demand?

c. A theater that shows the same movie to Large families and to individuals and couples. (Hint: For which set of people will the overall expense of a movie be a larger part of their budget, \(s\) o that demand is relatively more elastic?)
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