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Expain the concept of short run equilibrium of a monopoly market assuming zero cost
? Related: Short run Equilibrium under Monopoly
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Expain the concept of short run equilibrium of a monopoly market assum...
Short Run Equilibrium under Monopoly
In a monopoly market with zero cost, the short run equilibrium is determined by the intersection of the monopoly's marginal cost (MC) and marginal revenue (MR) curves. Here's how it works:
1. Profit Maximization
- The monopoly will produce where MR = MC to maximize profits.
2. Price and Output Determination
- The price is determined by the demand curve at the quantity where MR = MC.
- The output level is determined by the quantity where MR = MC.
3. Profit or Loss
- If the price exceeds average total cost (ATC) at the profit-maximizing quantity, the monopoly earns profits.
- If the price is below ATC at the profit-maximizing quantity, the monopoly incurs losses.
4. Shutdown Point
- If the price falls below average variable cost (AVC) at the profit-maximizing quantity, the monopoly should shut down in the short run.
5. Impact on Market
- As a price maker, the monopoly can influence market prices and quantities.
- Consumers may face higher prices and lower quantities compared to a competitive market.
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Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly?
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Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly?.
Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Expain the concept of short run equilibrium of a monopoly market assuming zero cost Related: Short run Equilibrium under Monopoly?.
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