Figure 9.6 Figure 9.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.6.What amount of profit does the monopolist earn?
A)$0.
B)$170.
C)$248.
D)$372.

Question

Figure 9.6  Figure 9.6 shows the cost and demand curves for a monopolist.
-Refer to Figure 9.6.What amount of profit does the monopolist earn?
A)$0. 
B)$170. 
C)$248. 
D)$372.

Quizplus · Accepted Answer

To find the profit, we need to determine the quantity at which the monopolist should produce. This is where marginal revenue equals marginal cost, which occurs at a quantity of 6. At this quantity, the price is $38 and the average total cost is $20, resulting in a profit of $18 per unit. Therefore, total profit is 6 x $18 = $108. However, the monopolist also has a fixed cost of $140, so the total profit is $108 - $140 = -$32. This means the monopolist is making a loss, not a profit. Therefore, the answer is C, which indicates a profit of $248 is incorrect.

Figure 96 Figure 9