Class 12 Micro Economics - Chapter Non-competitive Markets NCERT Solutions | A monopoly firm has a total fixed cost o
A monopoly firm has a total fixed cost of Rs 100 and has the following demand schedule:
|
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
|
Marginal Revenue |
100 |
90 |
80 |
70 |
60 |
50 |
40 |
30 |
20 |
10 |
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in the long run? In case the total cost is Rs.1000, describe the equilibrium in the short run and in the long run.
|
Quantity |
Price (P) (Rs) |
TR = (P*Q) (Rs) |
|
1 |
100 |
100 |
|
2 |
90 |
180 |
|
3 |
80 |
240 |
|
4 |
70 |
280 |
|
5 |
60 |
300 |
|
6 |
50 |
300 |
|
7 |
40 |
280 |
|
8 |
30 |
240 |
|
9 |
20 |
180 |
|
10 |
10 |
100 |
As the full cost of the monopolist firm is zero, the income can be the maximum in which TR is the maximum. That is, on the sixth unit of output the firm might be maximizing its profit and the fast run equilibrium price might be Rs 50.
income of the firm = three hundred
quick run equilibrium charge = Rs 50
profit = TR - TC
= 300 - 0
income = Rs 300
If the whole price is Rs one thousand , then the equilibrium may be at a point in which the distinction among TR and TC is the most.
TR is the maximum on the 6 th level of output.
So earnings = 300 – 1000 = - seven-hundred
So, the company is earning losses and now not earnings. as the monopolist company is incurring losses inside the short run, it'll stop its production in the long run.
More Questions From Class 12 Micro Economics - Chapter Non-competitive Markets
- Q:-
List the three different ways in which oligopoly firms may have.
- Q:-
Will the monopolist firm continue to produce in the short run if a loss is incurred at the best short run level of output?
- Q:-
Comment on the shape of MR curve in case when TR curve is a
(a) Positively sloped straight line
(b) Horizontal straight line
- Q:-
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity
1
2
3
4
5
6
7
8
9
Marginal
Revenue
10
6
2
2
2
0
0
0
-
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What is meant by prices being rigid? How can oligopoly behavior lead to such an outcome?
- Q:-
The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity are given in the schedules below.
Quantity
0
1
2
3
4
5
6
7
8
Price
52
44
37
31
26
22
19
16
13
Quantity
0
1
2
3
4
5
6
7
8
Price
10
60
90
100
102
105
109
115
125
Use the information given to calculate the following:
(a) The MIR and MC schedules
(b) The quantities for which MIR and MC are equal
(c) The equilibrium quantity of output and the equilibrium price of the commodity
(d) The total revenue, total cost and total profit in the equilibrium
- Q:-
What would be the shape of the demand curve so that the total revenue curve is?
(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
- Q:-
If the monopolist firm of Exercise 3 was a public sector firm. The government set a rule for its manager to accept the government fixed price as given (i.e. to be a price taker and therefore behave as a firm in a perfectly competitive market). And the government has decided to set the price so that demand and supply in the market are equal. What would be the equilibrium price, quantity and profit in this case?
- Q:-
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.
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