-The above figure shows the demand and cost curves for a monopolist. What is the maximum economic profit this firm can make?
A) zero
B) $200
C) $100
D) $400

Question

-The above figure shows the demand and cost curves for a monopolist. What is the maximum economic profit this firm can make?
A) zero 
B) $200 
C) $100 
D) $400

Quizplus · Accepted Answer

The maximum economic profit for a monopolist is found where marginal revenue equals marginal cost (MR=MC), which determines the quantity produced. Then, the economic profit is the difference between total revenue and total cost at that quantity. Without seeing the figure, the general approach involves identifying the quantity where MR=MC, then calculating the area between the demand curve (price) and the average total cost curve over that quantity, which represents economic profit. Given the options and typical scenarios, a profit of $200 could be a plausible outcome based on common graphical interpretations.

-The Above Figure Shows the Demand and Cost Curves for a Monopolist