The following figure shows the revenue and cost curves of a monopolist.Figure 11.3
D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
-Consider the monopolist described in Figure 11.3. The firm can maximize profit by producing:

Question

The following figure shows the revenue and cost curves of a monopolist.Figure 11.3

D: Average Revenue
MR: Marginal Revenue
ATC: Average Total Cost
MC: marginal Cost
-Consider the monopolist described in Figure 11.3. The firm can maximize profit by producing:

Quizplus · Accepted Answer

The profit maximizing output for a monopolist is where MR=MC. In this case, the point where MR=MC is at Q₂ units. At this output, the monopolist charges a price of P1 and produces at a cost of ATC1, resulting in a positive economic profit. Producing more or less than this output level would result in a lower profit or even losses for the monopolist.

The Following Figure Shows the Revenue and Cost Curves of a Monopolist.Figure