Figure 15-6

Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist earns a profit of
A)$0.
B)$170.
C)$248.
D)$372.

Question

Figure 15-6
  
Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The monopolist earns a profit of
A)$0. 
B)$170. 
C)$248. 
D)$372.

Quizplus · Accepted Answer

The monopolist maximizes profit at the quantity where marginal revenue (MR) equals marginal cost (MC). From the graph, we can see that MR is the blue line and MC is the red line. They intersect at a quantity of 8. At this quantity, the monopolist can charge a price of $31 and their average total cost is $23. Therefore, their profit per unit is $31 - $23 = $8. Multiplying this profit by the quantity of 8, we get a total profit of $248. Therefore, the monopolist earns a profit of $248.

Figure 15-6 Figure 15-6 Shows the Cost and Demand Curves for a and Demand