Question

A monopolist's marginal cost curve shifts down, but the firm's demand curve remains the same. as a result of the fall in marginal cost, the monopolist will _____ its price and _____ its output.

Answer 1

A monopolist's marginal cost curve shifts down, but the firm's demand curve remains the same. as a result of the fall in marginal cost, the monopolist will raise its price and decrease its output.

What is marginal cost?

The difference between the total cost and the change in energy output is known as the marginal cost (MC) curve. The MC curve and the firm's supply curve are the same in totally competitive marketplaces.

Due to how the "law of changing proportions" operates in the near term, the marginal cost curve has a U-shaped shape. The law states that the MC curve initially slopes downward until it reaches its minimum point, at which time it begins to slope upward. As a result, when represented visually, the curve takes on the shape of a U.

Because a corporation seeking to maximize profits will only create until the marginal cost (MC) equals marginal income, marginal cost is a key concept in economic theory (MR). Beyond that, the cost of manufacturing a new item will be more than the profit made.

Although a monopolist's demand curve changes, its marginal cost curve stays the same. The monopolist will increase its price and cut back on production as a result of the decline in marginal cost.

To learn more about marginal cost refer to:

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