Monopoly Firm Cost Analysis

Because beyond that point, the cost of producing additional units will decrease while the market price remains fixed, leading to increased profits.

It is not rational to produce at that level of output because the cost of producing additional units will decrease while market price remains unchanged.

Producing nothing may be better if it results in lesser loss than the decision to produce.

<p>Because even though profit is maximized when price equals marginal cost, it does not ensure that profit is maximized.</p> Signup and view all the answers

<p>The firm needs to consider both marginal revenue and marginal cost to maximize profit.</p> Signup and view all the answers

<p>For profit maximization, the firm should produce at a level where marginal cost equals average cost.</p> Signup and view all the answers

<p>The additional cost the firm incurs from producing and selling one more (or a few more) units of output.</p> Signup and view all the answers

<p>Marginal revenue is zero at a quantity of 7 because that is the point where the firm maximizes its total revenue before it starts declining.</p> Signup and view all the answers

<p>Marginal revenue turns negative because to sell more output, the monopolist must cut the price, leading to a situation where more sales bring in less revenue.</p> Signup and view all the answers

<p>A monopoly typically faces a U-shaped average cost curve.</p> Signup and view all the answers

<p>Maximum profit is possible where the marginal cost curve intersects the marginal revenue curve.</p> Signup and view all the answers

<p>Marginal revenue decreases as a monopoly sells additional units of output.</p> Signup and view all the answers

<p>Producing up to the quantity where marginal revenue is equal to marginal cost (MR = MC).</p> Signup and view all the answers

<p>By producing where marginal revenue equals marginal cost (MR = MC).</p> Signup and view all the answers

<p>Marginal cost is the change in total cost from producing a small amount of additional output. It helps in determining the profitability of each additional unit produced.</p> Signup and view all the answers

<p>Marginal profit is defined as marginal revenue minus marginal cost. Total profit is the sum of marginal profits.</p> Signup and view all the answers

<p>Total profit is maximized where marginal revenue equals marginal cost (MR = MC).</p> Signup and view all the answers

<p>A perfectly competitive firm also finds its profit-maximizing level of output where marginal revenue equals marginal cost (MR = MC).</p> Signup and view all the answers