Readers Question Explain with the help of diagrams the equilibrium of a firm having monopoly power in the market in the short-run and long-run?
The diagram for a monopoly is generally considered to be the same in the short run as well as the long run.
Profit Maximisation occurs where MR=MC. Therefore equilibrium is at at Qm, Pm.
Features of this diagram
- There are barriers to entry in Monopoly. Firms are price makers. The industry demand curve is the same as the firms demand curve.
- Profits are maximised at output where MR=MC. This means they set a price greater than MC which is allocatively inefficient.
- In this diagram the firms makes supernormal profits because AR is greater than AC.
Note: In monopolistic competition the short run equilibrium is different to the long run equilibrium
More on Monopoly
12 comments ↓
what is short run equilibrium?
Why monopolies make economic profit in both the long run and the short run?
where the monypoly equilibrium.. here some people cant understand..website name i seconomicshelp.com but no clarity i that.. so please give the clarity
Hi I have a quick question. When I look in textbooks regarding profit maximization for monopolies or perfect competition The economic profit is calculated as the area above the average total cost where MR=MC. I’m confused about what the area means for the distance between MR and MC to the left of when MR=MC. The area between those curves is larger.
using appropriate illustrations and practical examples, compare and contrast profit maiximisation in perfect competition and monopoly
explain with the aid of a diagram, how production possibility curves can be useful in determining levels of efficiency, inefficiency, economic growth and technological improvement.
using the appropriate illustration and practical examples, compre and contrast profit maximazation in perfect competition?
consider production of two products of your choice and explain with the aid of the diagrams, ow production possibilities curves can be useful in determining levels of efficiency, inefficiency,economic growth and technological improvement?
1.consider production of two products of your choice and explain with the aid of the diagrams, ow production possibilities curves can be useful in determining levels of efficiency, inefficiency,economic growth and technological improvement?
2.using appropriate illustrations and practical examples, compare and contrast profit maiximisation in perfect competition and monopoly
explain with the aid of a diagram, how production possibility curves can be useful in determining levels of efficiency, inefficiency, economic growth and technological improvement.
2.using appropriate illustrations and practical examples, compare and contrast profit maiximisation in perfect competition and monopoly
i want to see only the long-run equilibrium of monopoly try to make it avialable
Leave a Comment