Scelta multipla
Which of the following lists the correct order of steps to calculate a monopolist's profit using a graph?
117
views
12. Monopoly
Monopoly Profit on the Graph
Scelta multipla
This pure monopolist:
A
Charges the highest price it could achieve
B
Earns only a normal (accounting) 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
Guida verificata passo dopo passo1
Identify the key curves in the graph: Demand (D), Marginal Cost (MC), Average Total Cost (ATC), and Marginal Revenue (MR).
Understand that a monopolist maximizes profit where Marginal Revenue (MR) equals Marginal Cost (MC). This is the point where the monopolist decides the quantity of output to produce.
Locate the intersection of the MR and MC curves on the graph. This intersection determines the profit-maximizing quantity of output for the monopolist.
To find the price the monopolist will charge, extend a vertical line from the profit-maximizing quantity up to the Demand (D) curve. The point where this line intersects the Demand curve indicates the price.
Recognize that by restricting output to the profit-maximizing quantity, the monopolist can charge a higher price than in a competitive market, thereby increasing its total economic profit.
Video correlati
Pratica correlata
