Equilibrium of the Firm: Long and Short Run Equilibrium

Added on - 18 Dec 2019

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Economics
Table of ContentsINTRODUCTION......................................................................................................................31. Presenting a short run equilibrium of profit maximizing in short-run related tomonopolistic situation............................................................................................................32. Establishing relationship between demand and selling price.............................................4a. Constructing cost and revenue and table............................................................................6b..............................................................................................................................................71. Assessing profit maximizing level for output (each week)................................................72. Assessing profit maximizing price.....................................................................................83. Identifying maximum profit level......................................................................................8CONCUSION............................................................................................................................9REFERENCES.........................................................................................................................10Figure 1: Short \-run equilibrium position.................................................................................3Figure 2: Long-run equilibrium position....................................................................................4Figure 3: Relationship between price and quantity demanded..................................................6Figure 4: Cost curve...................................................................................................................8
INTRODUCTIONField of economics is highly significant which in turn helps company in makingsuitable decisions that directly aid in the growth and profitability aspect. It assists analyst inmaking proper estimation of demand as well as supply and thereby helps in making suitablepricing decisions. In this, report will develop understanding about short and long runequilibrium position of monopolist. Further, it will also shed light on the extent to whichrelationship takes place between sales and quantity demanded.1. Presenting a short run equilibrium of profit maximizing in short-run related tomonopolistic situationIn the monopoly market, business unit can maximize profit level and reduce loss byequalizing marginal cost and revenue. Business entity has opportunity to attain super ornormal in short run by performing activities in monopoly market (Elsadany and Awad, 2016).Monopolists require satisfying the following aspects to get equilibrium position is as follows:First situation: Marginal cost (MC) = Marginal revenue (MR)Second situation: Equilibrium is when MC curve cuts MR (Monopoly diagram inlong and short run,2016)Equilibrium position with positive profit in short run is enumerated below: