Reference no: EM131169348
a. Draw a diagram illustrating the profitmaximizing output for the monopolist with abnormal profit. The diagram should contain short-run average cost, average variable cost, short-run marginal cost, and marginal revenue curves and shade area that represents abnormal profit. Make your diagram large and label all curves, axes, and points
b. Why, in the case of a monopolist, is marginal revenue at any output less than output price?
c. Explain why a monopolist maximizes its long-run profit by producing that output for which marginal revenue equals long-run marginal cost. What sense does this monopolist pricing differ to perfect competitive market?
d. Can the profit-maximizing monopolist produce an output that lies in the inelastic portion of the demand curve it faces? Why or why not?
e. Why doesn't the abnormal profit of a monopolist, unlike that of the perfect competitor, reduce to zero in the long run?
f. Explain how price regulation of a monopoly can reduce the social cost (deadweight loss) of monopoly.
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Competing producers and enhances overall country welfare
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Profitmaximizing output for monopolist with abnormal profit
: Draw a diagram illustrating the profitmaximizing output for the monopolist with abnormal profit. The diagram should contain short-run average cost, average variable cost, short-run marginal cost, and marginal revenue curves and shade area that repres..
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