Figure 8.12
-Figure 8.12 shows a demand and costs of an unregulated monopoly. At the profit maximization output, the firm earns a profit of

Question

Quizplus · Accepted Answer

The profit maximization output is where marginal revenue equals marginal cost, which in this case is at a quantity of 80 units. At this quantity, the price is $20 and the average total cost is $10. The profit per unit is therefore $10. Multiplying this by the quantity sold of 80 units gives a total profit of $10,000 (B).

Figure 8.12 -Figure 8.12 Shows a Demand and Costs of an Unregulated