Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is
A)loss of $7 per unit
B)profit of $30 per unit
C)loss of $21 per unit
D)profit of $14 per unit

Question

Figure 9.3  Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The profit/loss per unit is
A)loss of $7 per unit 
B)profit of $30 per unit 
C)loss of $21 per unit 
D)profit of $14 per unit

Quizplus · Accepted Answer

The profit/loss per unit is determined by the difference between the price and the average total cost at the profit-maximizing output level. If the monopolist is incurring a loss of $7 per unit, it means the average total cost is $7 higher than the price at which the monopolist sells its product.

Figure 93 Figure 9