Answer of Long Ques #1

Ans by: Nurul Habib Chowdhury

ID: 1930900

Answer:

Here is a horizontal line represents quantity and vertical line represents cost and revenue.
There is 2 lines go to downward which are demand and marginal revenue. And 2 lines go
upward which are average total cost and marginal cost.
We know In monopoly market the firm can choose profit maximizing level where marginal
cost equals to marginal revenue or MR=MC where the firm can make higher profits by
expanding output. When the marginal revenue and marginal cost connect each other point
of A at Qmax, which means maximum quantity generate maximum revenue. When we goes
to left side Q1 where we can produce lower quantity and price will be higher so demand
goes up but we cannot fulfil the supply to the market and we have shortage of quantity. And
if we produce in level of q2 price will be lower and we can produce more quantity but the
quantity is overload and demand also goes down and we need to make price lower.
So if we need maximum profit in maximum output the point a shows that and that is Qmax
to point a and if we goes upward in point B we can make maximum level of profit in
maximum price.
So we decide that in Qmax level of quantity where MR=MC is equals and that point we can
get maximum price if we lower or higher the quantity then the demand goes down so we
cannot make maximum profit.