Why Monopoly Supply Curve?
A Monopoly Firm Has No Well-Defined Supply Curve. .. . This Is Because of the Fact That Output Decision of a Monopolist Not Only Depends on Marginal Cost but...
A monopoly firm has no well-defined supply curve. ... This is because of the fact that output decision of a monopolist not only depends on marginal cost but also on the shape of the demand curve. “As a result, shifts in demand do not trace out a series of prices and quantities as happens with a competitive supply curve.”
What is true about the supply curve for a monopoly?
There is no supply curve for a monopolist. This differs from a competitive industry, where there is a one-to-one correspondence between price (P) and quantity supplied (Qs). For a monopoly, the price depends on the shape of the demand curve, as shown in Figure 3.4. 1.
Why MC is the supply curve?
Accordingly, the marginal cost curve (MC) is that firm's supply curve for the output; as price of output rises, the firm is willing to produce and sell a greater quantity. Combining the MC curves for all the firms producing the product is the supply curve for the industry.
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