Question

Discuss how a monopolist determines how much output to produce, what price to charge, and the amount of its profits.

Short answer

If the price is greater than the standard cost, the monopolist earns a fortune.

Step-by-step solution

Introduction

A single firm is not a taxable person because it sets the market price while deciding how much it will supply. Because little much is sold, total revenue for a monopolist is remarkably low for minimal amounts of labor. Net income is similarly low at quite relatively high numbers, so that a large amount will only sell at a low cost.

Given Information

A monopolist's net income will begin low, grow, and then drop. A monopolist's marginal benefit from supplying new items will decline. Monopolies are poor in terms of economic growth so they do not produce at the lowest on the average total cost curve.

Step 3; Explanation

They do not generate so at level where $P=MC$, mega corporations are not allocatively efficient. As either a reason, monopolists manufacture little, at a higher estimated cost, and require a higher price than just a collection or true competitive enterprises. The single firm choose the profit-maximizing level of output where $MR=MC$, and then impose the price given by the market price for that value of production. If the price is greater than the standard cost, the monopolist earns a fortune.