Firm X is a monopoly. It is producing a level of output at which MC = $15, MR = $15, ATC = $16, and price = $17. From this information, we know that this firm is maximizing its profit.

Question

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In a monopoly, profit maximization occurs where marginal cost (MC) equals marginal revenue (MR). Since MC = MR = $15, Firm X is maximizing its profit despite the average total cost (ATC) being higher than MC and MR, and the price being set above ATC indicates the firm is covering its costs and making a profit.

Firm X Is a Monopoly