Short run equilibrium of a firm under monopoly, Managerial Economics

Assignment Help:

The short run equilibrium of monopolist is displayed below in figure.

2209_Short run equilibrium of a firm under monopoly.png

Figure: Abnormal Profit under Monopoly

AR is the average revenue curve, MR is marginal revenue curve, AC is average cost curve and MC is marginal cost curve. Up to OQ, level of output marginal revenue is greater than marginal cost though beyond OQ the marginal revenue is less than marginal cost.

So the monopolist would be in equilibrium where MC=MR. So a monopolist is in equilibrium at OQ level of output and at OP price. He earns abnormal profit equal to PRST. Though, it isn't always possible for a monopolist to earn super normal profits. If cost and demand situations aren't favourable, monopolist may incur short run losses.

536_Short run equilibrium of a firm under monopoly1.png

Figure: Loss under Monopoly

Though monopolist is a price maker, because of high costs andweak demand, he suffers a loss equal to PABC as displayed above in figure.


Related Discussions:- Short run equilibrium of a firm under monopoly

Predicting the stock market, In this question you will consider the impact ...

In this question you will consider the impact on the building industry of the earthquake. Two construction and materials indices have been provided for the analysis.  If your famil

Cost concepts, Ask question #MinimumElectron Control, Inc., sells voltage r...

Ask question #MinimumElectron Control, Inc., sells voltage regulators to other manufacturers, who then customize and distribute the products to quality assurance labs for their sen

Determine the studies of managerial economics, Determine the studies of Man...

Determine the studies of Managerial economics Managerial economics studies the application of techniques, principles as well as concepts of economics to managerial problems of

Objectives of demand forecast, Drafting of Production Policy: Demand forec...

Drafting of Production Policy: Demand forecasts assists in drafting appropriate production policy so that there may not be any space between future demand and supply of a product.

Pigou effect, The pigou effect, also called the real balance effect, is nam...

The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship

Derive from production and consumption, (a) Define and explain, using dia...

(a) Define and explain, using diagrams, consumers' surplus; producers' surplus and total surplus that a society can derive from production and consumption of a good at a particu

Gatt & wto, introduction, evaluation,principle, activities concept behind G...

introduction, evaluation,principle, activities concept behind Gatt & wto

#title., #Plot the demand schedule and draw the demand curve for the data g...

#Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.question..

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd