question archive Why is there no market supply curve under conditions of monopoly? a) Output decisions depend not only on marginal cost but also on the demand curve
Why is there no market supply curve under conditions of monopoly? a) Output decisions depend not only on marginal cost but also on the demand curve
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Why is there no market supply curve under conditions of monopoly?
a) Output decisions depend not only on marginal cost but also on the demand curve. Shifts in demand lead to changes in price but not output. Thus, there is no one-to-one correspondence between price and the seller's quantity.
b) Output decisions depend not only on marginal cost but also on the demand curve. Shifts in demand lead to changes in price, output, or both. Thus, there is no one-to-one correspondence between price and the seller's quantity.
c) Since the monopolist is the only firm in the market, it simply allows its marginal cost curve to act as the "monopolist's" supply curve.
d) Output decisions depend not only on marginal cost but also on the demand curve. Shifts in demand lead to changes in output but not price. Thus, there is no one-to-one correspondence between price and the seller's quantity.
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c. Since the monopolist is the only firm in the market, it simply allows its marginal cost curve to act as the monopolist's supply curve.
Reason: In case of a monopoly, there is only one single seller in the market who caters to the entire market demand. The monopolist being a single seller will seek to set his output and price level at the profit maximising point. The marginal cost curve then becomes a guiding factor for deciding the level of output in the market. The monopolist will supply the level of the output at the point where the marginal revenue equals marginal cost. The price is however set at the level corresponding to the MR = MC point in the AR curve.
