The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. At this monopolist's profit-maximizing level of output, it:
A)earns an economic profit of $16 per day.
B)incurs an economic loss of $16 per day.
C)earns an economic profit of $64 per day.
D)incurs an economic loss of $64 per day.

Question

The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist.  At this monopolist's profit-maximizing level of output, it:
A)earns an economic profit of $16 per day. 
B)incurs an economic loss of $16 per day. 
C)earns an economic profit of $64 per day. 
D)incurs an economic loss of $64 per day.

Quizplus · Accepted Answer

The monopolist loses $4 on each of the 4 units sold.

The Accompanying Figure Shows the Demand Curve, Marginal Revenue Curve