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i1.13-S x-Watch Couragemx1 caifornia univeritxMhbox (185). nyas x E Calf m aUniversx a Aplia: Student Qu af/servlet/quiz ctx soos1-00068iquiz action-takeQuiz&iquiz; probGuid-QNAPCOA801010000003bcdafd0o800008ck m 1513283407589 How To Return Hor Clarence Season 2 The Spooky Case of O TV Go Channels-XF nomics 12:30 TR Nyasia Talley-Joseph Home Grades Personalized Reviews Discussion Course Materials ews Analysis-Vista: A Tale of Two Market Structures aded Assignment | Back to Assignment Due Thursday 12.14.17 at 11 Attempts: Average: 12 5. Comparing profit margins in monopolistic and competitive markets Aa Aa Marginal revenue is the additional revenue that companies make when they sell more copies of Vista. Think about your answers to the previous questions. You should have found that the marginal revenue for Microsoft is different from the marginal revenue for computer retailers. The difference helps to explain why Microsoft earns higher profit margins than retailers. Every firm sets marginal revenue equal to marginal cost when making any decision. Because of the different shapes of their marginal revenue curves, the price at which Microsoft sold Vista was retailers sold Vista was its marginal cost, while the price at which their marginal cost. Save & Continue oe.Explanation / Answer
Microsofft is a monoopolist firm whereas computer retailers are like firms competing in sompetitive market.
Evry firm in any market set output when Mr equals MC. But in competitive market, MR is actually demand curve which is horizontal in shape. And this demand curve isAverage revenue curve also which is price actually. It implies MR=demand=AR=price in competitive market. And at equilibriumMR=MC or Price=MC.
On other hand, in monopoly market MR is different from demand curve. To which AR also differ from MR. And MR equals MC to decide the output but price is determined when this intersection is conjoined iwth demand curve that is always above MR curve. Hence at equilibrium Price is more than MR and hence price in more than MC.
Therefore, when microsoft sells vista, price is greater than MC and when computer operators sell it price equals MC.
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