for u economists!! (1 Viewer)

[wallid]

heloo

im kinda stuck with a question in my assignment was wondering if u guys could help..

its in relation to profit maximisation & cost minimization..


it says

"a monopolist attempts to maximise the difference between price and average cost"...

any thoughts??

thanks!!!!!!

 

[absolution*]

"a monopolist attempts to maximise the difference between price and average cost"..

Well in a monopoly, firms tend to be price makers as opposed to price takers due to lack of competition. Therefore they will aim to raise prices to the point where profit maximisation occurs. Prices are still nonetheless restricted in non-essential service industries where aggregate demand in the product dictates price levels to some extent.

Its not rocket science.