The following graph shows the market demand and average cost curve for electricity (in millions of kilowatts)in an urban centre:

-Refer to the above graph to answer this question.Suppose that the price is $3,and the market is served by a monopolist.What quantity will be sold,and what will be the total profit or loss?
A)75 and $0.
B)80 and $40.
C)100 and $100.
D)110 and $0.
E)110 and $27.50.

Question

The following graph shows the market demand and average cost curve for electricity (in millions of kilowatts)in an urban centre:
 
-Refer to the above graph to answer this question.Suppose that the price is $3,and the market is served by a monopolist.What quantity will be sold,and what will be the total profit or loss?
A)75 and $0. 
B)80 and $40. 
C)100 and $100. 
D)110 and $0. 
E)110 and $27.50.

Quizplus · Accepted Answer

At a price of $3, the monopolist will sell 100 units. The total revenue is $300 (100 units x $3), and if the cost is $2 per unit (from the graph), the total cost is $200 (100 units x $2), resulting in a profit of $100 ($300 - $200).

The Following Graph Shows the Market Demand and Average Cost