The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolist can charge whatever price it wants and can therefore reap phenomenal profits.

Question

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolist can charge whatever price it wants and can therefore reap phenomenal profits.

Quizplus · Accepted Answer

While a monopolist may be able to charge a higher price than a perfectly competitive market, it cannot charge whatever price it wants without consequences. If the monopolist charges too high a price, consumers may switch to substitutes or choose not to buy the product at all, ultimately leading to a decrease in demand and potential loss of profits for the monopolist. Additionally, some governments may regulate or break up monopolies to promote competition and protect consumers.

The Figure Given Below Shows the Cost and Revenue Curves