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What is the shape of the monopolists marginal revenue cur

Pregunta del cliente

What is the shape of the monopolist’s marginal revenue curve?
Enviada: hace 5 año.
Categoría: General
Experto:  Ing. Navas escribió hace 5 año.
Greetings

This is the shape of a "Monopolist Marginal Revenue Curve":



More info can be found in the bext link:

- Marginal revenue for a monopolist

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Experto:  Ing. Juan Ramón escribió hace 5 año.

A monopolist's marginal revenue is always less than or equal to the price
of the good. Marginal revenue is the amount of revenue the rm receives for

each additional unit of output. It is the diference between total revenue { price

times quantity { at the new level of output and total revenue at the previous

output (one unit less).


Thus

MR(Q) = P(Q)Q􀀀P(Q􀀀1)(Q􀀀1) < P(Q)Q􀀀P(Q)(Q􀀀1) =

P

(Q), since P(Q 􀀀 1) > P(Q).

therefore the monopolist's marginal cost curve lies below its demand curve.

Another way to see this:

when a monopoly increases amount sold, it has two efects on total revenue:

{ the output ect: More output is sold, so

Q is higher.

{ the price e,ect: To sell more, the price must decrease, so

P is lower.

For a competitive rm there is no price e
ect. The competitive rm can sell

all it wants at the given price.

for a monopoly there is a price ect. It must reduce price to sell additional

output. So the marginal revenue on its additional unit sold is lower than the

price, because it gets less revenue for previous units as well (it has to reduce

price to the same amount for all units).

Marginal revenue can even become negative { that is, the total revenue

decreases from one output level to the next.

Pro t Maximization

like a competitive rm, the monopolist produces the quantity at which

marginal revenue equals marginal cost. The di
erence is that for the monopo-list, marginal revenue no longer equals price.

The price that the monopolist charges is the price at which buyers are willing

to buy the pro t-maximizing quantity.

Monopoly does not have a supply curve. There is no function of price that
determines what quantity a rm will o er given a price. Instead, the quantity

arm o thers is determined by the entire demand curve it faces.


The shape of the demand curve determines the shape of the marginal revenue

curve, which determines with the marginal cost curve the pro t-maximizing

quantity.

In a competitive market supply decisions are made based on just price (the

demand curve faced by a single rm is horizontal at some price). In a monopoly,

supply decisions need more than just the knowledge of one price.

For a rm in competitive market, price equals marginal cost.

P = MR =MC

. For a monopolist, price exceeds marginal cost. P > MR = MC.

Experto:  Ing. Juan Ramón escribió hace 5 año.

2,. the grafiq we can see it on this page, and we can determinated the grafic with the numbers that we will have. i hoppe to help you with my informattion or documentes tha i find it check this please. is intersting to read an very explaineed.

http://www.albany.edu/~aj4575/LectureNotes/Lecture30.pdf

see yuo later ok thanks a lot for your pattients. and comprenssions.

thanks.