Figure 14-6
-Refer to Figure 14-6.A profit-maximizing monopolist would earn profits of
A) $96.
B) $117.
C) $120.
D) $126.

Question

Figure 14-6 
-Refer to Figure 14-6.A profit-maximizing monopolist would earn profits of
A) $96. 
B) $117. 
C) $120. 
D) $126.

Quizplus · Accepted Answer

The profit-maximizing monopolist produces where marginal revenue equals marginal cost, which is at a quantity of 6 units. At this quantity, the price charged is $20. The average total cost at this quantity is $10, so the monopolist earns a profit of $10 per unit sold. Therefore, the total profit earned by selling 12 units is $10 × 12 = $120.

Figure 14-6 -Refer to Figure 14-6.A Profit-Maximizing Monopolist Would Earn Profits of Earn