Explain monopolist losses.

Question

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Answer 1

Question

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

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Answer 2

Question

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

Answer 6

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.

Economics Concept Introduction

Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.

Profit: Profit refers to financial gain of a business after deducting all its cost.

Answer 7

Chapter 24, Problem 1VQP

To determine

Explain monopolist losses.

Answer 8

Expert Solution & Answer

Explanation of Solution

Monopolists can earn a profit when its price is greater than the average total cost. A monopoly will produce a profit-maximizing output at marginal cost equal to marginal revenue and charges a high price to enjoy a super normal profit in the market. But a monopolist can incur a loss too. Shown in below figure.

Economics (Book Only), Chapter 24, Problem 1VQP

According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.