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Rain84 Rain84
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Posts: 9
9 years ago
can someone help with this  Evaluate this statement: "A monopolist can charge whatever she wants because she is the only source available."
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Valued Member
Educator
9 years ago
The statement is false. The monopolist can only choose one of the variables: either what price to charge or what quantity to produce. She cannot choose both. Once the monopolist chooses a price, she is constrained to sell only so much as demanded by consumers at that price, given by the demand curve. To give an example, if a monopolist chooses an arbitrarily high price, she may be able to sell any of its output is the demand at that price is zero. Decision wise, the monopolist chooses a price (or quantity) to maximize profits.
wrote...
9 years ago
No, even the monopolist has to reduce price to sell more. That is the reason why MR is under the demand curve in this market. But if it knows the customer so well, it can use the price differentiation policy and take all of consumer surplus away. But normal consumers are not that stupid.
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