In the long run the cost and revenue curves of the monopolist may shift due to various reasons — product or process innovation, imposition of a tax or provision of subsidy. We may first consider the effect of a change in demand. Change in demand may be of two types: short run and long run. Changes in demand: Short-run shifts [...]
Get the answer of: Why does the Monopolist Operate on the Elastic Part of the Demand Curve? A monopolist wishing to maximise profit produces the output up to that amount at which MC = MR. But it is said that no monopolist will ever fix the output for his product at any level where demand for his product is inelastic [...]
Equilibrium of the Monopolist under Alternative Cost Conditions ! An important difference between perfect competition and monopoly may now be noted. While under perfect competition it is possible for a firm to reach equilibrium only when marginal cost is rising at the point of equilibrium, monopoly equilibrium may be reached under alternative cost conditions. In other words, a monopoly firm [...]