Show that a monopoly will not necessarily lower its price by the same percentage as its constant marginal cost drops: 1.) Use the point drawing tool to indicate the initial equilibrium price and quantity. Label this point 'E' 2.) Use the line drawing tool to show a 50 percent decrease in marginal cost. Label this line 'MC₁'. 3.) Use the point drawing tool to indicate the new equilibrium price and quantity. Label this point 'E,'. Carefully follow the instructions above, and only draw the required objects. What is the percentage change in the price given a 50 percent decrease in marginal cost? The price decreased by percent. (round your answer to two decimal places) 50- 45- 40- 35- 30- 25- 20 15- 10- 5 0- Price, P 10 20 30 MR 40 50 60 Quantity, Q 70 D 80 -MC C 90 100

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Monopoly Market

When a company and its products dominate a sector or an industry, it is termed a monopoly. When a firm and its products control a market, then it is called a monopoly.