Suppose a monopolist faces the demand curve and cost curves shown below. FIGURE 10-5
-Refer to Figure 10-5.If this single-price monopolist is producing at the profit-maximizing level of output,the total profit is represented by the area

Question

Suppose a monopolist faces the demand curve and cost curves shown below.  FIGURE 10-5
-Refer to Figure 10-5.If this single-price monopolist is producing at the profit-maximizing level of output,the total profit is represented by the area

Quizplus · Accepted Answer

The total profit for a monopolist is the area between the price and the average total cost (ATC) at the profit-maximizing output level. This is represented by the area P₄abP₂, where P₄ is the price, P₂ is the ATC, and ab is the quantity produced.

Suppose a Monopolist Faces the Demand Curve and Cost Curves