Figure 10-6
Figure 10-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-6.The monopolist's total cost is
A) $1,116.
B) $1,240.
C) $1,660.
D) $1,726.40.

Question

Figure 10-6
  Figure 10-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 10-6.The monopolist's total cost is
A) $1,116. 
B) $1,240. 
C) $1,660. 
D) $1,726.40.

Quizplus · Accepted Answer

The best choice for the monopolist is to produce where marginal cost equals marginal revenue, which is at a quantity of 16. At this quantity, the monopolist can charge a price of $110 and earn a total profit of $400 (($110-$80)*16). The monopolist's total cost at a quantity of 16 is $1,240, which is the sum of fixed cost ($800) and variable cost (16*$30=$480). Therefore, the best choice for the monopolist is to produce a quantity of 16 and charge a price of $110.

Figure 10-6 Figure 10-6 Shows the Cost and Demand Curves