Figure 15-7
The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist.

-Refer to Figure 15-7.What is monopoly profit without price discrimination

Question

Figure 15-7
The figure depicts the demand, marginal-revenue, and marginal-cost curves of a profit-maximizing monopolist.
 
-Refer to Figure 15-7.What is monopoly profit without price discrimination

Quizplus · Accepted Answer

Monopoly profit is the difference between total revenue and total cost. In Figure 15-7, the monopolist maximizes profit where MR=MC, which is at point E (where quantity is 10 units and price is $500). At this quantity, the monopolist's total revenue is $5000 (10 units x $500 per unit) and the total cost is $3000 (10 units x $300 per unit). Therefore, the monopoly profit is $2000 ($5000 in total revenue - $3000 in total cost). This is the maximum profit the monopolist can earn without engaging in price discrimination.

Figure 15-7 the Figure Depicts the Demand, Marginal-Revenue, and Marginal-Cost Curves of Curves