Please help me write what are the interesting statement in this section and why

Question

Please help me write what are the interesting statement in this section and why is it important to know at economics 4-6 sentences Thanks!

11.3 WHAT IS THE MONOPOLY MoDEL? Because there are no competitors for its specific product type, the unregulated firm has the luxury of seeing the market demand as its own demand. This provides an excellent opportunity for the firm to set a steep price consistent with the profit-maximizing rule A monopoly is modeled with a diagram containing the demand, marginal revenue and marginal cost curves. (See Exhibit 11-A.) Monopoly faces a downward sloping demand curve for its product As a result the marginal revenue curve is also downward sloping, bisecting the angle created by the demand curve and the vertical axis. Recall that marginal revenue declines faster because price decreases for both the new quantities demanded and the former that would have fetched higher prices If the firm's objective were to maximize revenue, then it would lower price and sell up to the quantity where marginal revenue equals zero. This could be found in the model where the marginal revenue curve intersects the horizontal axis The price and quantity on the demand curve are at unit elasticity. Further down the demand curve is the inelastic range, where the percentage increase in quantity does not offset the percentage decrease in price

Explanation / Answer

Monopoly is the situation of market in which there is a single seller of a product with no close substitutes in the market. Under monopoly, there are some restrictions on the entry of new firms into monopoly industry. Monopolist is a price maker. He has full control over the price of product. He can fix whatever price he wishes to fix for his product. Monopolist can also practise price discrimination i.e., charging different prices from different buyers for the same good.

The demand curve of monopolist is downward sloping which shows that more quantity of goods can be sold only at a lower price. Monopolist earn economic profits when Total revenue (TR) is greater than Total Costs (TC). Monopoly form of market is generally regarded as 'a dead weight' from the society's point of view.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.