FIGURE 10- 4 Suppose a monopolist faces the demand curve and cost curves shown below.

-Refer to Figure 10- 4.If the single- price monopolist is producing at the profit- maximizing level of output,the total cost is represented by the area

Question

FIGURE 10- 4 Suppose a monopolist faces the demand curve and cost curves shown below.
 
-Refer to Figure 10- 4.If the single- price monopolist is producing at the profit- maximizing level of output,the total cost is represented by the area

Quizplus · Accepted Answer

At the profit-maximizing level of output, the monopolist will produce where marginal revenue (MR) equals marginal cost (MC). This occurs at point Q0 in the diagram. The total cost at that level of output is represented by the area 0P2bQ0, which includes both the variable cost and the fixed cost. Therefore, the correct answer is C.

FIGURE 10- 4 Suppose a Monopolist Faces the Demand Curve