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-Refer to the graph of demand and marginal revenue. If a profit-maximizing monopolist with a constant unit cost equal to $40 faces the demand curve plotted in the graph, then the monopolist's total profit

Question

Use the following to answer questions below
 
-Refer to the graph of demand and marginal revenue. If a profit-maximizing monopolist with a constant unit cost equal to $40 faces the demand curve plotted in the graph, then the monopolist's total profit

Quizplus · Accepted Answer

The monopolist will produce at the quantity where marginal revenue equals marginal cost. At this quantity, the price will be $70 and the total revenue will be $70 * 100 = $7000. The total cost will be $40 * 100 = $4000. Therefore, the total profit will be $7000 - $4000 = $3000.

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