1. What are the main rules in making decisions concerning costs?
2. 
Homework Answers
The effect of a decrease in demand on a monopolist are shown in the graph below. Explanation follows.
The new demand curve is shown in pink as Demand2. The new MR curve is shown in pink as MR2. As demand decreases, demand curve shifts to left. Similarly MR curve also changes, and is now lower.
The new quantity is where the new MR and Demand curves intersect. As can be seen, the new quantity Q2 is lower than earlier quantity. The corresponding price, P2, is also lower than earlier price.
So, Price, output and eocnomic profit all are now lesser.
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1. What are the main rules in making decisions
concerning costs?
2.
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