Given the figure below, a non-discriminating, profit-maximizing monopolist will earn a profit of _____ per unit of output.
Figure 9.1

A)$10
B)$5
C)$4
D)$0
E)$15

Question

Given the figure below, a non-discriminating, profit-maximizing monopolist will earn a profit of _____ per unit of output.​ ​
Figure 9.1

A)$10​ 
B)$5 
C)$4 
D)$0 
E)$15

Quizplus · Accepted Answer

To determine the profit maximizing quantity for a monopolist, we look for the quantity where marginal revenue (MR) equals marginal cost (MC). From the graph, we can see that the marginal cost curve intersects with the marginal revenue curve at a quantity of 4. At this quantity, the monopolist will charge a price of $14, which is found by going up to the demand curve from the quantity of 4. The monopolist's average total cost (ATC) at a quantity of 4 is $10, which is found by going up to the ATC curve from the quantity of 4. Therefore, the monopolist's profit per unit of output is equal to the difference between price and average total cost, which is $4 ($14 - $10 = $4).

Given the Figure Below, a Non-Discriminating, Profit-Maximizing Monopolist Will Earn