00:01
So we're going to be looking at a monopolist and what is going to govern the, whether or not the, or when they produce the extra unit of a product, what condition needs to be met.
00:20
Okay, so basically we look into the equilibrium for monopolist.
00:25
We understand that the monopolist versus marginal revenue curve that is down on slopping, so it's the average revenue.
00:36
And when it comes to marginal cost curve, we do have the monopolist producing at a point where the average cost curve touches the marginal cost curve at a slowest point.
00:56
Right so we can actually illustrate this as such so we have our atc of restoro cost curve just to demonstrate equilibrium for the monopolist and this is the the profits for the monopolist so generally we whichever the competition it is we understand the profit maximization point, profit maximization is going to be at where, which actually is, incidentally, the golden rule, marginal revenue equals marginal cost.
01:49
Marginal revenue equals marginal cost.
01:53
So we want to find out if the monopolist is to produce one extra unit, which incidentally would be the marginal should be the price level, which would be the marginal revenue.
02:08
What would at what level would the marginal, would the monopolist to produce? so several options have been given.
02:15
So let's look at the other options given here, the first one.
02:20
The difference.
02:21
Okay, so for a monopolist to produce one more unit of output or product, the difference of the price in marginal revenue must be equal to zero.
02:33
Okay, so basically that that basically should be because the marginal revenue should actually be the price.
02:48
But let's look at the other one.
02:49
Demand must be in the inelastic range of demand curve...