$\begin{array}{lll}
\text { Quantity } &\text {Price } &\text { Total cost }\
\hline1 & \$ 500 & \$ 400 \
2 & 450 & 650 \
3 & 400 & 950 \
4 & 350 & 1,300 \
5 & 300 & 1,700
\end{array}$
Table 24.1
Hypothetical Monopoly Costs and Revenue In Table 24.1, according to the profit maximization rule, at the profit-maximizing level of output, the average total cost is
A) $316.67.
B) $325.
C) $400.
D) $340.

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output (4 units), the total cost is $1,300. The average total cost is calculated as total cost divided by quantity, which is $1,300 / 4 = $325.

Table 241 Hypothetical Monopoly Costs and Revenue in Table 24

Table 241
Hypothetical Monopoly Costs and Revenue in Table 24