question archive 1)Explain why the monopolist has no supply curve
1)Explain why the monopolist has no supply curve
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1)Explain why the monopolist has no supply curve.
2)Consider a natural monopolist (unregulated) that would like to produce where MR=MCMR=MC. It faces a downward - sloping demand curve of P=100−2QP=100−2Q and marginal revenue curve of 100−4Q100−4Q. Its marginal cost is $20 no matter how many units it makes, it is constant.
a. Solve for the profit-maximizing quantity for this natural monopolist by setting MR=MCMR=MC and solving for Q.
Q = _____
b. Suppose fixed costs are $100. What is the total cost for this monopolist?
TC = _____
c. What is the average total cost for the monopolist? What is the difference between this number and the price?
ATC = _____ Difference: _____
d. What are the monopolist's profits?
Profits = _____
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1)The monopolist has no supply curve because it is a price-maker. A price-maker does not have a defined relationship between price and output sold, making it difficult to locate any point on the graph. This is because prices for a particular quantity of goods sold are set according to the demand elasticity. Thus, marginal revenue curves for the monopolist will cut the marginal cost curve at two different levels of output. Hence, the supply curve does not form in the case of the monopolist.
2)please see the attached file for the complete solution.
