Answer to Question #236089 in Microeconomics for KAT

Question

Deprive monopoly demand for an input when several inputs are used in the production process?

Answer 1

Monopoly demonstrates as a market structure where there is a single seller. The monopolist has full control over the market structure because of the advantage that there is no close substitute available in the market in which monopolist deal. And there are numerous buyers thus monopoly also charges higher prices for the product. 

The aim of the firm is to maximize profits. It means that firm will produce where the revenue will be higher/greater than the expenses. When the MR of selling is greater than the MC of producing it, then it can be said that firms are producing profits there.

A good should continue to be produced if the MR is greater than the MC (marginal cost). Thus the maximizing solution involves setting MR (marginal revenue) equal to MC. In the monopoly market, the MR curve and demand curve are distinct and downward sloping. Production occurs where MC and MR intersect.