The following figure shows the revenue and cost curves of a monopolist.

-Refer to the figure above.The output produced in this market is ________ units,while the output produced under a comparable perfectly competitive market is ________ units.

Question

The following figure shows the revenue and cost curves of a monopolist.
 
-Refer to the figure above.The output produced in this market is ________ units,while the output produced under a comparable perfectly competitive market is ________ units.

Quizplus · Accepted Answer

The monopolist will produce where MR=MC, which is at an output of 10 units. At this output, the monopolist will charge a price of $60 per unit, resulting in total revenue of $600. The monopolist's total cost at this output level is $400, resulting in a profit of $200.

In a perfectly competitive market, firms will produce where P=MC, which is at an output of 26 units (where the demand curve intersects the marginal cost curve). At this output, the price will be $24 per unit, resulting in total revenue of $624. Total cost at this output level is $520, resulting in a profit of $104 per firm. Since there are 2 identical firms in the market, the total output produced is 52 units.

The Following Figure Shows the Revenue and Cost Curves of a Monopolist