-According to the above figure, when the monopolist maximizes profits, its profits are equal to the area given by
A) AKMC.
B) AKOD.
C) BLPE.
D) EPRF.

Question

-According to the above figure, when the monopolist maximizes profits, its profits are equal to the area given by
A) AKMC. 
B) AKOD. 
C) BLPE. 
D) EPRF.

Quizplus · Accepted Answer

In a monopoly, profit maximization occurs where marginal cost (MC) intersects marginal revenue (MR). The area representing profit is the difference between total revenue and total cost. Total revenue is represented by the area under the demand curve (up to the quantity produced), and total cost is represented by the area under the MC curve (up to the quantity produced). Therefore, the area AKOD represents the monopolist's profits, as it is the area between the demand curve (price) and the average total cost curve (ATC) from the origin to the quantity produced (Q).

-According to the Above Figure, When the Monopolist Maximizes Profits