Consider the following AR and MR curves for a single-price monopolist. FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

Question

Consider the following AR and MR curves for a single-price monopolist.  FIGURE 10-2
-Refer to Figure 10-2.If marginal costs were positive and constant but less than A,the profit-maximizing output for this single-price monopolist would be

Quizplus · Accepted Answer

The profit-maximizing output for the single-price monopolist occurs where MR=MC. In this case, that point is Q₂, where the MR curve intersects the MC curve. At this output level, the monopolist will charge a price of P1U1B, and obtain a positive economic profit shown by the gap between the price and the average cost curve. At any output level less or greater than Q₂, the monopolist would earn less profit or suffer losses.

Consider the Following AR and MR Curves for a Single-Price