Use Figure 8.2,which represents the situation faced by a monopolist,to answer questions a-c.

a. In Figure 8.2, indicate the profit maximizing price and output level and label them P₁ and Q₁.
b. Shade in the area that represents the firm's economic profit (or loss).
c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P₂ and Q₂.

Question

Use Figure 8.2,which represents the situation faced by a monopolist,to answer questions a-c.
 
a. In Figure 8.2, indicate the profit maximizing price and output level and label them P₁ and Q₁.
b. Shade in the area that represents the firm's economic profit (or loss).
c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P₂ and Q₂.

Quizplus · Accepted Answer

The Answer of Use Figure 8.2,which represents the situation faced by a monopolist,to answer questions a-c.
 
a. In Figure 8.2, indicate the profit maximizing price and output level and label them P₁ and Q₁.
b. Shade in the area that represents the firm's economic profit (or loss).
c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P₂ and Q₂.