The following graph gives cost and revenue data for a monopolist:

-Refer to the above graph to answer this question.If the monopolist is regulated and forced to charge a fair-return price,what will be its total profit or loss as a result?
A)$0.
B)Loss of $5.
C)Loss of $550.
D)Profit of $700.
E)Profit of $950.

Question

The following graph gives cost and revenue data for a monopolist:
 
-Refer to the above graph to answer this question.If the monopolist is regulated and forced to charge a fair-return price,what will be its total profit or loss as a result?
A)$0. 
B)Loss of $5. 
C)Loss of $550. 
D)Profit of $700. 
E)Profit of $950.

Quizplus · Accepted Answer

At the fair-return price, a monopolist is regulated to charge a price where average total cost (ATC) equals demand, which typically results in zero economic profit. This is because the price set covers all the costs, including normal profit, but does not allow for any excess profit above this level.

The Following Graph Gives Cost and Revenue Data for a Monopolist