Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist. At this monopolist's profit-maximizing level of output, its total revenue equals the area:
A)0HNC.
B)0FJB.
C)0FLE.
D)ELJB.

Question

Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist.  At this monopolist's profit-maximizing level of output, its total revenue equals the area:
A)0HNC. 
B)0FJB. 
C)0FLE. 
D)ELJB.

Quizplus · Accepted Answer

MC = MR at F units of output, and from the demand curve we can see that at that level of output, the monopolist will charge a price of B. Total revenue equals price times quantity.

Suppose the Accompanying Figure Shows the Demand Curve, Marginal Revenue