Explain monopolist losses.
Explanation of Solution
Monopolists can earn a profit when its price is greater than the
According to the figure, a monopolist can also incur a loss because whatever it is, a monopoly is only a firm in the market. It can increase the price only with respect to its demand. Some time it may be possible that the demand for a product declines. Then, the increased price becomes less than the average total cost. Then, it will bear a loss on its product as shown by the area P1ABC in the figure.
Monopolistic market: A monopolistic market is a market with many sellers producing differentiated goods.
Profit: Profit refers to financial gain of a business after deducting all its cost.
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