Answer to Question #9842 in Microeconomics for hassanshami

Question

what are three important cost curves and two important revenue curve and how do they play their role in determining
equilibrium price
equilibrium quantity
equilibrium point
abnormal profit
in monopoly

Answer 1

the three important cost curves are Marginal Costs (MC), Average Total Costs (ATC) and Average Variable
Costs (AVC) and two important revenue curves are Marginal Revenue (MR) and
Demand (D).
Their role in determining
1) equilibrium price: the intersection of MR and MC
2) equilibrium quantity: the intersection of MR and MC
3) equilibrium point: the intersection of MR and MC, MR = D, MC = S
4) abnormal profit in monopoly: the point on the demand curve above the intersection of MR and MC.