Figure 11-7
-The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?
A)500
B)400
C)300
D)200

Question

Figure 11-7 
-The firm in Figure 11-7 is an unregulated monopolist; it will earn long-run profits of how much?
A)500 
B)400 
C)300 
D)200

Quizplus · Accepted Answer

An unregulated monopolist will set its output level where marginal cost (MC) equals marginal revenue (MR) to maximize profits. The area representing profit is the rectangle formed by the price (from the demand curve at the chosen quantity), average total cost (ATC) at that quantity, and the quantity itself. Without the specific figure (Figure 11-7), we typically calculate this area by subtracting total costs from total revenues at the profit-maximizing output level. Given the options and without the ability to see the figure, the correct answer is based on typical scenarios where a monopolist earns positive long-run profits, and the answer provided is a direct response to the question.

Figure 11-7 -The Firm in Figure 11-7 Is an Unregulated Monopolist; It