1. What is the relationship between a monopolist\'s demand curve and the market

Question

1.       What is the relationship between a monopolist's demand curve and the market demand curve?

What is the relationship between a monopolist's demand curve and the marginal revenue curve?

2.       Draw a graph that shows a monopolist earning a profit. Be sure your graph includes the
monopolist's demand, marginal revenue, average total cost, and marginal cost curves. Also be
sure to indicate the profit-maximizing level of output and price.

3.       Explain why market power leads to a deadweight loss. Is the total deadweight loss from market
power for the economy large or small?

A student argues, "If a monopolist finds a way of producing a good at lower cost, he will not lower
his price. Because he is a monopolist, he will keep the price and the quantity the same and just
increase his profit." Do you agree? Use a graph to illustrate your answer.

(please own words thanks)

Explanation / Answer

1)The inverse relationship between price and quantity demanded is the critical element in monopoly price setting. Because a single firm provides the entire quantity of the commodity in the market, the demand for the monopolist

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