Which point does the monopolist use to decide how much to produce?
Which point does the monopolist use to choose what price to charge for the profit-maximizing output?
Use the information in the table below to answer the following.
|Quantity||Price||Total Revenue||Marginal Revenue||Total Cost||Marginal Cost|
- List an example of a legal barrier to entry and describe how a firm might use a barrier to entry to keep other firms out of the market.
- What is the profit-maximizing output of this monopolist, and how much does it charge for its output?
- Calculate the profits earned for this firm at the equilibrium point.
- If this firm were operating in a perfectly competitive market instead of a monopoly, would it produce more or less than it is now? Would it charge a higher or lower price than it is now? Explain.