The figure below shows the revenue and cost curves for a profit-maximizing monopolist. Based on the figure, the region bounded by CADE represents ______.Figure 8-1:
A)total costs.
B)total losses.
C)total profits.
D)total consumer surplus.
E)total producer surplus.

Question

The figure below shows the revenue and cost curves for a profit-maximizing monopolist. Based on the figure, the region bounded by CADE represents ______.Figure 8-1: 
A)total costs. 
B)total losses. 
C)total profits. 
D)total consumer surplus. 
E)total producer surplus.

Quizplus · Accepted Answer

The region bounded by CADE represents total revenue while the region bounded below by the cost curve represents total cost. The monopolist maximizes their profit where marginal revenue equals marginal cost (point E). Therefore, the area between the total revenue and total cost curves up to point E represents total profit.

The Figure Below Shows the Revenue and Cost Curves for a Profit-Maximizing