ISOQUANTS OR EQUAL PRODUCT CURVES
Partial Equilibrium Approach In the partial equilibrium approach to pricing, we explain price determination of a single commodity, keeping the prices of other commodities. We assume that the prices 01 various commodities are independent of one another and do not...
ISOQUANTS OR EQUAL PRODUCT CURVES
Price Determination: General Statement Before Marshall, there was a dispute among economists on whether the force of demand (i.e., marginal utility) or the force of supply (i.e., cost of production) is more important in determining price. Marshall gave equal...
ISOQUANTS OR EQUAL PRODUCT CURVES
PRICE-OUTPUT DETERMINATION UNDER MONOPOLY Price-output is ab” all allal flf the equilibrium or the firm and industry . Since in a monopoly, a single firm constitutes the whole industry, there is no need for a separate analysis of the equilibrium of thc firm and...
ISOQUANTS OR EQUAL PRODUCT CURVES
Equating Marginal Revenue and Marginal Cost 111e aun of the monopolist. like every other producer. i. to maximize his total money profits. Therefore, hc will produce up to a point and charge a price which glue huu thc maxi ilium profiteroles. In other words, he will...
ISOQUANTS OR EQUAL PRODUCT CURVES
DETERMINATION OF SHORT-RUN PRICE In a preceding chapter, we explained that in the short-run a firm is in equilibrium at the output at which price equals marginal cost. It was also pointed out that, during the short-run, fixed costs arc disregarded in making a decision...
ISOQUANTS OR EQUAL PRODUCT CURVES
Price as a Rationing Device We shall discuss more fully later the role of price in a modern economy. We may only say here that price is a signal to the producers to expand or contract production and a warning to the consumers as to the possible shortage of the...
