Asked by Sydnee Frakes on Jun 01, 2024
Verified
(Figure: Computing Monopoly Profit) Use Figure: Computing Monopoly Profit.At the profit-maximizing output,total cost is:
A) P10QG.
B) P30QE.
C) P20QF.
D) FQ2.
Profit-Maximizing Output
The level of production at which a business achieves the highest possible profit, where marginal revenue equals marginal cost.
Total Cost
The sum of all costs incurred in the production of goods or services, including fixed and variable costs.
Monopoly Profit
The excess profit that a monopoly firm makes due to its control over the market, preventing other firms from entering the market.
- Work out and illustrate the costs, revenue generation, and profitable outcomes of a firm in a monopolistic market through economic visuals and theories.
Verified Answer
RG
Rowland GallotJun 07, 2024
Final Answer :
C
Explanation :
At the profit-maximizing output, total cost is equal to P20QF. This is because the profit-maximizing output is where marginal cost equals marginal revenue, which occurs at point Q. The total cost at Q is found by drawing a line from Q to the total cost curve and then dropping it down to the horizontal axis. This intersects the horizontal axis at point F, which corresponds to a total cost of P20QF.
Learning Objectives
- Work out and illustrate the costs, revenue generation, and profitable outcomes of a firm in a monopolistic market through economic visuals and theories.