Question

Q.21 :-A profit-maximizing output for a single- price monopoly is determined by the intersection of the curves and the profitmaximizing price is found on the curve.​

Answer 1

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Answer 2

A profit-maximizing output for a single- price monopoly is determined by the intersection of the curves and the profitmaximizing price is found on the curve.​

• The level of output where a monopoly's profit is maximised occurs when the marginal cost and marginal income are equal.
• A company with a single price monopoly is required to charge all of its clients the same amount for each unit of product it produces. DeBeers charges a fixed price for diamonds of the specified quality.
• The intersection of the next two curves, marginal cost and marginal, determines the amount of production that the monopolist can produce while still making a profit.
• Solving for MR = MC allows monopolists to determine the output q and price p that maximise profits, just like in perfect competition.
• Marginal revenue is less than price because the monopolist has to reduce the price of every unit in order to sell more. Because marginal revenue is smaller than price, it will be below the demand curve because the marginal revenue curve will also be below price.
• By examining the marginal revenue and marginal expenses of producing an additional unit, a monopolist can estimate the price and quantity that will maximise its profits. The company should produce an additional unit if the marginal revenue is greater than the marginal cost.

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