Exhibit 8-7 Monopolist

-As shown in Exhibit 8-7,in the short run,the monopoly will:

Question

Exhibit 8-7 Monopolist
 
-As shown in Exhibit 8-7,in the short run,the monopoly will:

Quizplus · Accepted Answer

In the short run, the monopoly will produce where MR=MC, which is at an output of 40 units and a price of $8. At this output level, the total cost is $320 (i.e. ATC*$40). The total revenue is $320 (i.e. $8*40). Therefore, the profit is $0 (= $320 - $320). However, since the monopoly incurs a fixed cost of $400, the economic profit is -$80 (= $0 - $400). Hence, the monopoly will earn an hourly profit of $80.

Exhibit 8-7 Monopolist -As Shown in Exhibit 8-7,in the Short Run,the Monopoly Will