What is the monopolist's profit under the following conditions? The profit-maximising price charged for goods produced is $40.The intersection of the marginal-revenue and marginal cost-curves occurs where output is 20 units and marginal cost is $25.Average cost for 20 units of output is $15.
A)$300
B)$500
C)$200
D)$40

Question

Quizplus · Accepted Answer

To find the monopolist's profit, we need to first calculate the monopolist's total revenue and total cost at the profit-maximizing level of output.

At the profit-maximizing level of output (20 units), the price charged is $40, so the monopolist's total revenue is:

Total revenue = Price x Quantity 
Total revenue = $40 x 20 units 
Total revenue = $800

To find the monopolist's total cost, we need to know the monopolist's marginal cost at 20 units of output. We know that the marginal cost at this level of output is $25, but we don't know the total cost. However, we know that the average cost for 20 units of output is $15. We can use this information to estimate the total cost.

Average cost = Total cost / Quantity 
$15 = Total cost / 20 units 
Total cost = $300

Now we can calculate the monopolist's profit:

Profit = Total revenue - Total cost 
Profit = $800 - $300 
Profit = $500

Therefore, the answer is B) $500.

What Is the Monopolist's Profit Under the Following Conditions? the Profit-Maximising