Exhibit 23-2 -Refer to Exhibit 23-2. This monopolist is earning A)an economic loss of area P₀P₃FA. B)an economic loss of area P₀P₂CA. C)an economic profit of area P₂P₃FC. D)an economic profit of area P₀P₂CA.

Question

Quizplus · Accepted Answer

The correct answer is C because the area described represents the difference between total revenue (area under the price level up to the quantity produced) and total cost (area under the average total cost curve up to the quantity produced), which is the definition of economic profit.

Exhibit 23-2 -Refer to Exhibit 23-2. This Monopolist Is Earning