Explain monopolist losses.
Explanation of Solution
Monopolists can earn a profit when its price is greater than the
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.
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?
Chapter 10 Solutions
Microeconomics (Book Only)
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage LearningEssentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc