94% Preview File Edit View Go Tools Window Help Tue 8:25 AM Microeconomics 21st PDF eBook.pdf (page 278 of 649) Q Search KEY GRAPH Microeconomics 21st PDF eB... Report een Shote n 39 57 AM FIGURE 12.4 Profit maximization by a pure monopolist. The pure monopolist maximizes profit by producing at the MR = MC output, here Q-5 units. Then, as seen from the demand curve, it will charge price P $122. Average total cost will be A $94 meaning that per-unit profit is P-A and total profit is $200 239 175 n Shot ..0.15 PM МС 150 Profit 5x (P-A). Total economic profit is thus represented Pm$122 125 per unit by the green rectangle Economic .АTC profit 100 n Shot .5.05 PM 75 A $94 MR MC 50 240 25 n Shot .6.42 PM MR Qm-5 units KEY GRAPН 4 5 6 7 8 9 0 2 3 10 о Quantity n Shot 57.32 PM QUICK QUIZ FOR FIGURE 12.4 1. The MR curve lies below the demand curve in this figure because the a. demand curve is linear (a straight line). b. demand curve is highly inelastic throughout its full length c. demand curve is highly elastic throughout its full length d. gain in revenue from an extra unit of output is less than the price charged for that unit of output 3. This pure monopoli st: a. charges the highest price that it could achieve. b. earns only a normal profit in the long run. c. restricts output to create an insurmountable entry barrier d. restricts output to increase its price and total economic profit : n Shot 2.22 AM 241 4. At this monopolist's profit-maximizing output a. price equals marginal revenue . NOW (AD 5 Price, costs, and revenue
94% Preview File Edit View Go Tools Window Help Tue 8:25 AM Microeconomics 21st PDF eBook.pdf (page 278 of 649) Q Search KEY GRAPH Microeconomics 21st PDF eB... Report een Shote n 39 57 AM FIGURE 12.4 Profit maximization by a pure monopolist. The pure monopolist maximizes profit by producing at the MR = MC output, here Q-5 units. Then, as seen from the demand curve, it will charge price P $122. Average total cost will be A $94 meaning that per-unit profit is P-A and total profit is $200 239 175 n Shot ..0.15 PM МС 150 Profit 5x (P-A). Total economic profit is thus represented Pm$122 125 per unit by the green rectangle Economic .АTC profit 100 n Shot .5.05 PM 75 A $94 MR MC 50 240 25 n Shot .6.42 PM MR Qm-5 units KEY GRAPН 4 5 6 7 8 9 0 2 3 10 о Quantity n Shot 57.32 PM QUICK QUIZ FOR FIGURE 12.4 1. The MR curve lies below the demand curve in this figure because the a. demand curve is linear (a straight line). b. demand curve is highly inelastic throughout its full length c. demand curve is highly elastic throughout its full length d. gain in revenue from an extra unit of output is less than the price charged for that unit of output 3. This pure monopoli st: a. charges the highest price that it could achieve. b. earns only a normal profit in the long run. c. restricts output to create an insurmountable entry barrier d. restricts output to increase its price and total economic profit : n Shot 2.22 AM 241 4. At this monopolist's profit-maximizing output a. price equals marginal revenue . NOW (AD 5 Price, costs, and revenue
Chapter9: Monopoly
Section: Chapter Questions
Problem 6SQP
Related questions
Question
Hi, I do not understand why B is the correct answer for number 3. How do I know that this monoply is earning a normal economic profit in the long run?
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Tue 8:25 AM
Microeconomics 21st PDF eBook.pdf (page 278 of 649)
Q Search
KEY GRAPH
Microeconomics 21st
PDF eB...
Report
een Shote
n 39 57 AM
FIGURE 12.4 Profit maximization by a pure
monopolist. The pure monopolist maximizes profit by
producing at the MR = MC output, here Q-5 units.
Then, as seen from the demand curve, it will charge
price P $122. Average total cost will be A $94
meaning that per-unit profit is P-A and total profit is
$200
239
175
n Shot
..0.15 PM
МС
150
Profit
5x (P-A). Total economic profit is thus represented
Pm$122
125
per unit
by the green rectangle
Economic
.АTC
profit
100
n Shot
.5.05 PM
75
A $94
MR MC
50
240
25
n Shot
.6.42 PM
MR
Qm-5 units
KEY GRAPН
4 5 6 7 8
9
0
2
3
10 о
Quantity
n Shot
57.32 PM
QUICK QUIZ FOR FIGURE 12.4
1. The MR curve lies below the demand curve in this figure because
the
a. demand curve is linear (a straight line).
b. demand curve is highly inelastic throughout its full length
c. demand curve is highly elastic throughout its full length
d. gain in revenue from an extra unit of output is less than the price
charged for that unit of output
3. This pure monopoli st:
a. charges the highest price that it could achieve.
b. earns only a normal profit in the long run.
c. restricts output to create an insurmountable entry barrier
d. restricts output to increase its price and total economic profit
:
n Shot
2.22 AM
241
4. At this monopolist's profit-maximizing output
a. price equals marginal revenue
.
NOW
(AD
5
Price, costs, and revenue
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