The following figure shows the marginal revenue (MR), marginal cost (MC), and demand (D) curves for a firm operating as a monopoly.

-Refer to the figure above.Compared to the competitive market outcome,when the monopolists sets its price to the optimal price,by how much is the quantity traded diminished?

Question

The following figure shows the marginal revenue (MR), marginal cost (MC), and demand (D) curves for a firm operating as a monopoly.
 
-Refer to the figure above.Compared to the competitive market outcome,when the monopolists sets its price to the optimal price,by how much is the quantity traded diminished?

Quizplus · Accepted Answer

In a monopolistic market, the monopolist sets the price higher than in a competitive market, leading to a lower quantity being traded. The difference in quantity traded between the competitive outcome and the monopolist's outcome is represented by the distance between Q₁ and Q₃ on the graph, which is Q₃ - Q₁.

The Following Figure Shows the Marginal Revenue (MR), Marginal Cost