Answer to Question #86756 in Microeconomics for Carmen

Question

Explain short turn equilibrium of a monopolistic firm with aid of a diagram

Answer 1

According to universal rule 2, acting in any market structure, the company produces such quantity of goods Q, at which the marginal revenue MR equals the marginal costs of the MC. A monopolist firm will also seek to fulfill this condition. The price of products produced by the monopolist will be determined by the demand for these products (the demand curve). The disclosure of the dependence of the price of goods sold by the monopolist on the volume of production is easier to do using the appropriate graphs.