Question

Assuming no economies of scale and identical costs, if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist, the likely result would be:__________

Answer 1

Assuming no economies of scale and identical costs, if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist, the likely result would be an Increase in price and reduced output.

A key characteristic of a monopolist company is that it is a profit maximizer. A monopolistic market has no opposition, meaning the monopolist controls the rate and quantity demanded. the level of output that maximizes a monopoly's earnings is while the marginal cost equals the marginal sales.

The profit-maximizing monopolist for the monopoly will be to produce at the amount wherein marginal sales is equal to marginal fee: that is, MR = MC. If the monopoly produces a decreased amount, then MR > MC at those ranges of output, and the firm could make better income by way of expanding output.

The profit-maximizing output stage is represented as the only at which total sales is the height of C and total price is the peak of B; the maximal earnings is measured as the period of the section CB. This output level is also the only at which the whole earnings curve is at its maximum.

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