The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements are correct?
i.MR = MC = $42 when 3 haircuts are produced.
ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
iii.The firm's economic profit is $12.
A) i only
B) ii only
C) i and ii
D) i and iii
E) i, ii, and iii

Question

The figure above shows a monopoly's total revenue and total cost curves.
-Using the figure above,which of the following statements are correct?
i.MR = MC = $42 when 3 haircuts are produced.
ii.If the firm charges each customer the same price for a haircut,the price of a haircut is $14.
iii.The firm's economic profit is $12.
A) i only 
B) ii only 
C) i and ii 
D) i and iii 
E) i, ii, and iii

Quizplus · Accepted Answer

i. We can see from the graph that at the quantity of 3 haircuts, MR = MC = $42.
ii. At the quantity of 3 haircuts, the demand curve intersects with the MR curve at a price of $14, so the firm would charge this price if it wants to sell all 3 haircuts.
iii. The firm's economic profit is the difference between total revenue and total cost at the quantity of 3 haircuts, which is ($14 x 3) - $18 = $30 - $18 = $12.

The Figure Above Shows a Monopoly's Total Revenue and Total