When a monopolist increases the amount of output that it produces and sells its average revenue?
When a monopolist increases output by one unit, it must reduce the market price in order to sell that unit. If the price elasticity of demand is less than 1, this will actually reduce revenue—that is, marginal revenue will be negative.
The monopolist faces the downward‐sloping market demand curve, so the price that the monopolist can get for each additional unit of output must fall as the monopolist increases its output. Consequently, the monopolist's marginal revenue will also be falling as the monopolist increases its output.
Also, if the monopolist reduces the quantity of output it produces and sells, the price of its output increases. Less than the price of its good because a monopoly faces a downward-sloping demand curve. To increase the amount sold, a monopoly firm must lower the price it charges to all customers. 1.
When a monopolist increases the number of units it sells, there are two effects on revenue: the output effect and the price effect.
Total revenue decreases as output increases when demand is: price inelastic. The monopolist's outcome happens at a: lower quantity than the perfectly competitive one.
When a monopolist increases sales by one unit, it gains some marginal revenue from selling that extra unit, but also loses some marginal revenue because every other unit must now be sold at a lower price.
To sell an additional unit, a monopoly firm must lower its price. The sale of one more unit will increase revenue because the percentage increase in the quantity demanded exceeds the percentage decrease in the price.
A monopolist can change its product's price by changing the quantity supplied of the product.
Since a monopolist faces a downward sloping demand curve, the only way it can sell more output is by reducing its price. Selling more output raises revenue, but lowering price reduces it.
A monopolist can determine its profit-maximizing price and quantity by analyzing the marginal revenue and marginal costs of producing an extra unit. If the marginal revenue exceeds the marginal cost, then the firm should produce the extra unit.
How does a monopolist's quantity of output compare to the quantity of output that maximizes total surplus?
A monopolist produces a quantity of output that's less than the quantity of output that maximizes total surplus because it produces the quantity at which marginal cost equals marginal revenue rather than the quantity at which marginal cost equals price.
When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect. You just studied 58 terms!
If demand is price elastic, a price reduction increases total revenue. To sell an additional unit, a monopoly firm must lower its price. The sale of one more unit will increase revenue because the percentage increase in the quantity demanded exceeds the percentage decrease in the price.
The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.
Unlike a lump-sum tax, a per-unit tax in monopoly causes an upward shift in the monopolist's average cost (AC) and marginal cost curves, by the amount of the tax, say, t. Consequently, the equilibrium output of the monopolist will fall and the price will rise.
When a monopolist increases the number of units it sells, there are two effects on revenue: the output effect and the price effect. Which of the following statements describe the output effect? -when monopoly increases the amount it sells, Less output is sold, which tends to decrease total revenue.
What might happen if a monopolist increased output of its product each week? A. The price of the good would eventually fall and so would revenue.
An increase in production by a monopolist has two opposing effects on revenue: A quantity effect— One more unit is sold, increasing total revenue by the price at which the unit is sold. A price effect— In order to sell the last unit, the monopolist must cut the market price on all units sold.
In a monopoly, because the price changes as the quantity sold changes, marginal revenue diminishes with each additional unit and will always be equal to or less than average revenue.
The marginal revenue for a monopolist is the private gain of selling an additional unit of output. The marginal revenue curve is downward sloping and below the demand curve and the additional gain from increasing the quantity sold is lower than the chosen market price.
Why is marginal revenue below average revenue for a monopolist quizlet?
The marginal revenue of a monopolist falls below price because the firm: Confronts a downward-sloping demand curve. A monopolist will charge a price that: exceeds the marginal cost.
when each additional unit of an input increases total output by more than did the previous unit, the firm is experiencing: increasing marginal returns. what is another name for the leontief production function? the _____ run is a period of time during which at least one factor of production is fixed.
does not have a supply curve because it is a price maker with one profit-maximizing price-quantity combination. Will a monopoly that maximizes profit also be maximizing revenue? Briefly explain. is not also maximizing revenue because revenue is highest when marginal revenue equals zero.
When the production level reaches a point that cost of producing an additional unit of output (MC) exceeds the revenue from the unit of output (MR), producing the additional unit of output reduces profit. Thus, the firm will not produce that unit.
Which of the following are reasons that a monopolist is considered a price maker? The monopolist controls the total quantity supplied.
A monopolist does not have a supply curve because: Multiple select question.
A monopolist will always be able to operate at a profit. Explanation: A monopoly will maximize profit (or minimize loss) by producing at that level of output where marginal revenue (MR) equals marginal cost (MC) and charging the price as determined by the products demand curve.
If the monopolist raises the price of its good, consumers buy less of it. Also, if the monopolist reduces the quantity of output it produces and sells, the price of its output increases.
-- An increase in demand leads to a shift of the demand curve to the right leading to an increase in price and quantity. -- The marginal revenue curve also shifts to the right.
Which of the following is an effect of a monopoly? Monopoly causes a reduction in consumer surplus.
Which of the following is true when a monopoly is producing the profit-maximizing quantity of output more than one may be true?
Which of the following is true when a monopoly is producing the profit-maximizing quantity of output? More than one may be true. When a monopoly is maximizing its profits, price is greater than marginal cost.
The monopolist will select the profit-maximizing level of output where MR = MC, and then charge the price for that quantity of output as determined by the market demand curve. If that price is above average cost, the monopolist earns positive profits.
What Is a Monopolist's Profit-Maximizing Level of Output? All firms maximize profits when their marginal cost is equal to the marginal product. This dollar amount should also be the selling price that maximizes profits.
The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves? natural monopoly. When a monopoly increases its output and sales, the output effect works to increase total revenue and the price effect works to decrease total revenue.
The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC. If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.
A monopolist chooses the amount of output to produce by finding the quantity at which marginal revenue equals marginal cost. It finds the price to charge by finding the point on the demand curve at that quantity. 3.
One barrier to entry into a monopoly market is: a natural monopoly. When the monopolist decides to supply a given amount to the market, it will: only sell that amount if it charges what the demanders are willing to pay for that amount.
