As shown in Exhibit 9-7, in the short run, the monopoly will:
A) earn an hourly profit of $240.
B) earn an hourly profit of $80.
C) break even (i.e., earn zero economic profit).
D) suffer an hourly loss of $160.

Question

Quizplus · Accepted Answer

In the short run, a monopoly will produce where marginal revenue equals marginal cost, which is at a quantity of 4 units and a price of $70. At this level of output, the total cost is $320 ($80 per unit x 4 units), and the total revenue is $280 ($70 per unit x 4 units). Therefore, the monopoly will earn an hourly profit of $80 ($280 total revenue - $320 total cost).

As Shown in Exhibit 9-7, in the Short Run, the Monopoly