Price and Output Determination

Price and Output Determination:

A monopolist similar to a perfectly competitive firm attempts to maximize his gains. A monopoly firm faces a down sloping demand curve, i.e., its average revenue curve. The downward sloping demand curve entails that larger output can be sold only by decreasing the price. Its marginal revenue curve will be beneath the average revenue curve.

The shape of average cost curve is ‘U’. The monopolist will be in balance whenever MC = MR and the MC curve cuts the MR curve from beneath.

In figure below, AR is the Average Revenue Curve and MR is the Marginal revenue curve. AR curve is declining and MR curve lies beneath AR. The monopolist is in symmetry at E where MR = MC. He generates OM units of output and fixes price at OP. At OM yield, the average revenue is MS and average cost is MT. Hence the profit per unit is MS-MT = TS. Total profit is the average profit (i.e., TS) multiplied by output (i.e., OM), that is equivalent to HTSP. The monopolist is in symmetry at point E and generates OM output at which he is earning maximum gain. The monopoly price is greater than the marginal revenue and marginal cost.

1052_price and output determination.jpg

 

Latest technology based Economics Online Tutoring Assistance

Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Monopoly help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Monopoly, project ideas and tutorials. We provide email based Monopoly help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Monopoly. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Economics Homework help and assignment help services. They use their experience, as they have solved thousands of Economics assignments, which may help you to solve your complex issues of Monopoly. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.