the profit maximizing output level for a monopolist is where the: course hero

How to find monopolist's profit maximizing level of output?

How does a monopolist determine marginal revenue?

Is a supply curve independent of a monopolist's supply curve?

Do monopolists incur short run losses?

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Profit Maximization Theory & Formula - Study.com

Calculating Profit Maximization. Take a look at how this formula can be used to maximize profits for a company: If the margin on a product is 20% and the total cost for production is $1 million ...

Monopoly Profit Maximization: How Monopolists Maximize Profit

Monopoly profit maximization occurs when monopolistic firms equate marginal cost to marginal revenue and solve for product price and quantity demanded.

Is the TR curve tangent to the TC curve?

In Fig. 11.6 (a), the TR and TC curves of the monopolist are tangent to each other at the point E or at the output q 0. Therefore, at this output the slope of the TR curve (or, the firm’s MR) is equal to the slope of the TC curve (or, the firm’s MC), i.e., the first order condition (FOC) for maximum profit has been satisfied.

Is the TC curve negative or positive?

Also, since the TR curve is concave downwards and the TC curve is convex downwards at the point E, the rate of change of the slope of the TR curve (which is negative) is less than that of the TC curve (which is positive) i.e., the second order condition (SOC) for the maximum profit has also been satisfied at this point.

How to find monopolist's profit maximizing level of output?

The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.

How does a monopolist determine marginal revenue?

In order to determine marginal revenue, the monopolist must know market demand. Therefore, the monopolist's market supply will not be independent of market demand. Previous Demand in a Monopolistic Market.

Do monopolists incur short run losses?

Monopolists, like perfectly competitive firms, can also incur losses in the short‐run. Monopolists will experience short‐run losses whenever average total costs exceed the price that the monopolist can charge at the profit maximizing level of output. Absence of a monopoly supply curve.

Is a supply curve independent of a monopolist's supply curve?

Absence of a monopoly supply curve. In Figure , there is no representation of the monopolist's supply curve. In fact, the monopolist's supply schedule cannot be depicted as a supply curve that is independent of the market demand curve. Whereas a perfectly competitive firm's supply curve is equal to a portion of its marginal cost curve, the monopolist's supply decisions do not depend on marginal cost alone. The monopolist looks at both the marginal cost and the marginal revenue that it receives at each price level. In order to determine marginal revenue, the monopolist must know market demand. Therefore, the monopolist's market supply will not be independent of market demand.

How to find monopolist's profit maximizing level of output?

The monopolist's profit maximizing level of output is found by equating its marginal revenue with its marginal cost, which is the same profit maximizing condition that a perfectly competitive firm uses to determine its equilibrium level of output. Indeed, the condition that marginal revenue equal marginal cost is used to determine the profit maximizing level of output of every firm, regardless of the market structure in which the firm is operating.

How does a monopolist determine marginal revenue?

In order to determine marginal revenue, the monopolist must know market demand. Therefore, the monopolist's market supply will not be independent of market demand. Previous Demand in a Monopolistic Market.

Is a supply curve independent of a monopolist's supply curve?

Absence of a monopoly supply curve. In Figure , there is no representation of the monopolist's supply curve. In fact, the monopolist's supply schedule cannot be depicted as a supply curve that is independent of the market demand curve. Whereas a perfectly competitive firm's supply curve is equal to a portion of its marginal cost curve, the monopolist's supply decisions do not depend on marginal cost alone. The monopolist looks at both the marginal cost and the marginal revenue that it receives at each price level. In order to determine marginal revenue, the monopolist must know market demand. Therefore, the monopolist's market supply will not be independent of market demand.

Do monopolists incur short run losses?

Monopolists, like perfectly competitive firms, can also incur losses in the short‐run. Monopolists will experience short‐run losses whenever average total costs exceed the price that the monopolist can charge at the profit maximizing level of output. Absence of a monopoly supply curve.