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Equilibrium of monopoly firm

In case of monopoly, the price output equilibrium is that level of price charged and output produced which gives maximum profit to the monopolist or which minimizes his losses. The condition for equilibrium in a monopoly market is the same as in other markets:
  • MC=MR
  • ƒMC curve must cut MR curve from below
Description: 21285.png
The diagram shows that MC curve cuts MR curve at point E. At E, the equilibrium price is OP and the equilibrium output is OQ.

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