Question

In case of imperfect competition (monopoly/monopolistic competition), determine producer's equilibrium using MR and MC approach.

Answer 1

In the diagram, MR curve will be downward sloping which shows to sell more output, the price has to be lowered. OQ is the equilibrium level of output because it also satisfies both the conditions of equilibrium, i.e., MC=MR and MC cuts MR from below.