This is my question: Keep in mind that Microsoft is a monopoly and I noticed that the price decreased with each additional quantity sold where as the firms price remain the same as each additional quantity is sold. And that the firms are fiercely competing with each other.
Marginal revenue is the additional revenue that companies make when they sell more copies of Vista. Think about your answers to the previous questions. You should have found that the marginal revenue for Microsoft is different from the marginal revenue for computer retailers.
The difference helps to explain why Microsoft earns higher profit margins than retailers. Every firm sets marginal revenue equal to marginal cost when making any decision. Because of the different shapes of their marginal revenue curves, the price at which Microsoft sells Vista is ________ its marginal cost, while the price at which retailers sell Vista is ________ their marginal cost.
I think the answer is "Greater than; equal to" for the fill in the blanks. But I am not too sure!!
By the way, the revenue curves for the firms is a diagonal line going upwards and the monopoly is a u-shaped upside down curve.
Marginal revenue is the additional revenue that companies make when they sell more copies of Vista. Think about your answers to the previous questions. You should have found that the marginal revenue for Microsoft is different from the marginal revenue for computer retailers.
The difference helps to explain why Microsoft earns higher profit margins than retailers. Every firm sets marginal revenue equal to marginal cost when making any decision. Because of the different shapes of their marginal revenue curves, the price at which Microsoft sells Vista is ________ its marginal cost, while the price at which retailers sell Vista is ________ their marginal cost.
I think the answer is "Greater than; equal to" for the fill in the blanks. But I am not too sure!!
By the way, the revenue curves for the firms is a diagonal line going upwards and the monopoly is a u-shaped upside down curve.