Table 15-3
A monopolist faces the following demand curve:

-Refer to Table 15-3.Consider that the monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,what is the monopolist's average total cost
A)$5.82
B)$6.74
C)$7.50
D)$9.00

Question

Table 15-3
A monopolist faces the following demand curve:

-Refer to Table 15-3.Consider that the monopolist has total fixed costs of $40 and a constant marginal cost of $5.At the profit-maximizing level of output,what is the monopolist's average total cost
A)$5.82 
B)$6.74 
C)$7.50 
D)$9.00

Quizplus · Accepted Answer

To find the average total cost (ATC) at the profit-maximizing level of output, we need to add the average fixed cost (AFC) to the marginal cost (MC), which is also the average variable cost (AVC) in this case. Assuming the profit-maximizing output level is 8 units (since the exact table is not provided), the AFC is $40/8 = $5. The ATC is then $5 (AFC) + $5 (MC) = $10. However, since the choices do not match this calculation, it is likely that the profit-maximizing output level is different, and the closest choice to a reasonable calculation is $7.50.

Table 15-3 A Monopolist Faces the Following Demand Curve