Question

6) For the monopolist, marginal revenue is always less than the price of the good.7. The monopolist chooses the quantity of output at which marginal revenue equals marginal cost and then uses the demand curve to find the price that will induce consumers to buy that quantity.

Answer 1

Answer:

Monopolist : Output at MR = MC; corresponding point at demand (AR) curve gives price.

Explanation:

Monopoly is a market structure having a single seller.

Monopolies have usual downward sloping demand curve, depicting price - demand inverse relationship. This 'falling price' case also makes monopoly Marginal Revenue curve usually lie down below its demand i.e Average Revenue Curve. Marginal cost is usually U shaped.

Monopoly producer chooses its equilibrium production quantity where : Marginal Revenue = Marginal Cost. The equilibrium price is determined at the price of corresponding equilibrium output, on the demand (average revenue) curve.