Figure 15-16

-Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit without price discrimination equals
A) $0.
B) $1,562.50.
C) $3,125.
D) $6,250.

Question

Figure 15-16
 
-Refer to Figure 15-16.If there are no fixed costs of production,monopoly profit without price discrimination equals
A) $0. 
B) $1,562.50. 
C) $3,125. 
D) $6,250.

Quizplus · Accepted Answer

The profit-maximizing price and quantity for a monopoly occurs at the intersection of the marginal revenue and marginal cost curves, which in this case is at a quantity of 500 units and a price of $12.50. The monopoly profit is then calculated as (Price - Average Total Cost) x Quantity, which in this case is ($12.50 - $5) x 500 = $3,125. Without any fixed costs of production, the monopoly profit equals the total profit, which is $3,125.

Figure 15-16 -Refer to Figure 15-16.If There Are No Fixed Costs of No