At an output of 1,000 units, a monopoly firm’s average revenue is $40, its marginal revenue is $30, its marginal cost is $30, its average variable cost is $35, and fixed costs are $5,000. Given this information, we can conclude that the monopolist:     a. is earning zero economic profit. b. is earning an economic profit equal to $5,000. c. is making an economic loss and should shut down. d. should increase output to maximize profit.

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
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At an output of 1,000 units, a monopoly firm’s average revenue is $40, its marginal revenue is $30, its marginal cost is $30, its average variable cost is $35, and fixed costs are $5,000. Given this information, we can conclude that the monopolist:

 

 

a. is earning zero economic profit.

b. is earning an economic profit equal to $5,000.

c. is making an economic loss and should shut down.

d. should increase output to maximize profit.

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