Quesiton: Why does a monopoly have to lower the price to sell the product? Compl
ID: 1135918 • Letter: Q
Question
Quesiton:
Why does a monopoly have to lower the price to sell the product?
Complete the columns for total revenue, marginal revenue, marginal cost, and profit for a monopoly. (5 marks) Quantiy sold PriceTC TR MC MRProfit 0 23 4 16 42 60 76 90 102 112 120 126 130 20 18 16 14 12 10 20 47 58 18 24 31 39 48 58 69 4 18 71 73 72 68 61 10 10 13 How many units of output should this monopoly firm produce in order to maximize its profits? What is the market price of the product, and what is the maximum profit? (4 marks) This firm should produce 7 units of output to maximize profits. Because the monopoly is a price setter, the market price is $16, with the maximum profit being $72 Why does a monopoly have to lower the price to sell the product?(4 marks)Explanation / Answer
The demand curve for the monopolist is downward sloping and this indicates that the price is neagtively related to quantity demanded. This means that if the monopolist wanted to sell more in the market he should lower the price of the product. The monoplist reduces the price for increasing the quantity sold in the market.