What is the supply curve for a pure monopolist?
The pure monopolist has no supply curve because there is no unique relationship between price and quantity supplied. The price and quantity supplied will always depend on location of the demand curve.
Why pure monopoly has no supply curve?
A monopoly firm has no well-defined supply curve. This is because of the fact that output decision of a monopolist not only depends on marginal cost but also on the shape of the demand curve. “As a result, shifts in demand do not trace out a series of prices and quantities as happens with a competitive supply curve.”
Why does a pure monopolist face a downward sloping demand curve?
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. Because the monopolist cannot price discriminate, it will have to sell all N + 1 units of output at the new lower price.
Which is the best example of price discrimination?
An example of price discrimination would be the cost of movie tickets. Prices at one theater are different for children, adults, and seniors. The prices of each ticket can also vary based on the day and chosen show time. Ticket prices also vary depending on the portion of the country as well.
Do pure monopolists maximize MR?
At that point, profit is maximized. If the monopolist increases production beyond MR = MC, then the marginal cost will be greater for each additional unit than marginal revenue, which will decrease profits, since costs continue to increase.
Is there a supply curve in a monopoly?
The Absence of a Supply Curve for a Monopolist There is no supply curve for a monopolist. A supply curve, then, requires a single price (P) for each quantity (Q). This graph shows that there is more than one price associated with each quantity.
What is the demand curve for a monopoly?
| 1. Because the monopolist is a single seller, it faces the market demand curve for the product produced. | |
| a. This demand curve is negatively sloped and shows that the monopolist can sell more output only by lowering the price of the product. | |
| 1. This means that the output the monopolist chooses to sell affects price. |
Why is Mr curve downward sloping?
Graphically, the marginal revenue curve is always below the demand curve when the demand curve is downward sloping because, when a producer has to lower his price to sell more of an item, marginal revenue is less than price.
When the price of a product is increased by 10 percent the quantity demanded decreases 15 percent?
The case in which the magnitude of the price elasticity of demand is less than one is called inelastic demand. If the magnitude of elasticity is greater than one then demand is said to be elastic. This corresponds to the example in which the quantity demanded went up by 15 percent for a 10 percent decrease in price.
Why is there no market supply curve under conditions of monopoly quizlet?
Why is there no market supply curve under conditions of monopoly? Output decisions depend not only on marginal cost but also on the demand curve. Shifts in demand lead to changes in price, output, or both. There is no one-to-one correspondence between price and the seller’s quantity.
Why does a monopoly not have a supply curve?
The monopolist has no supply curve because there is no unique relationship between price and output (quantity supplied). Price and output will change when demand and marginal revenue change. Under pure monopoly, price does not equal marginal revenue as is the case in pure competition .
Why does a monopolist have no supply curve?
A monopolist does not have a supply curve because it is not a price taker; it chooses its profit-maximizing price-quantity combination from among the possible combinations on the market demand curve. A monopolist does not face a market price.
Why is there no market supply curve under a monopoly?
The absence of supply curve in monopoly is as result of a lack of linear relationship between demand and supply. The monopolist determines its profit-maximizing price and then components a quantity of goods that permits it to acquire that price. Accordingly, there is no supply curve.
How is the demand curve in a pure monopoly?
However, the demand curve for all sellers in the market is downward sloping where demand quantity increases as prices decrease. For a pure monopolist, its supply is the entire market supply , and, thus, downward sloping. Since a monopoly is a price maker, it will determine what quantity of output will yield the greatest profits.