-Figure 10-5 shows the cost and demand curves facing a monopolist whose marginal cost is constant.The firm has no fixed costs.If it does not discriminate what will it's profit be?
A)area PP'BA
B)area OPAQ*
C)area PP'CA
D)area APC
E)area OP"BQ*

Question

-Figure 10-5 shows the cost and demand curves facing a monopolist whose marginal cost is constant.The firm has no fixed costs.If it does not discriminate what will it's profit be?
A)area PP'BA 
B)area OPAQ* 
C)area PP'CA 
D)area APC 
E)area OP"BQ*

Quizplus · Accepted Answer

The monopolist's profit is the area between the price and the average total cost (which is the same as marginal cost here since there are no fixed costs) up to the quantity produced. This is represented by area PP'BA.

-Figure 10-5 Shows the Cost and Demand Curves Facing a Monopolist