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Figure: A Profit-Maximizing Monopoly Firm

Figure 13-2 is representing a profit maximizing monopoly firm. On the Y axis is price which goes in intervals of $10, $15, $18, $20, $25, $30, $40 and $50. On the X-axis, it's quantity of output per week which goes 100, 150, 200, 250, 300, 400. On this axis, we have a marginal revenue curve, marginal cost curve, and average total cost curve and the demand curve. The marginal revenue curve starts at $50 on the Y-axis. And then X-axis starting point is 0, goes down to, on the downward slope, to 200, just past 250, on the quantity of output per week and the price is $0. Marginal cost curve starts roughly at a quantity of 150 output per week and a price just below $10 and curves up to between a price of 25 and $30 per week and an output between 300 and 400 per week. The average total cost curve starts at roughly below $25 per week in an output that is just below 150. It dips down and then returns back up at a price that is, again, between $25 and $20. And an output is just beyond 400. The demand curve starts at $50 and an output of 0 and continues down to demand that is just beyond 400 per week. And the price that is slightly below $10 per week. Several different key point's being shown here. At the $30 price point, we see that at that point, the marginal revenue curve is just below 150 quantity output per week. The marginal cost is at 200 quantity of output per week. At $25, the marginal revenue still at just about 150 per week. And the marginal cost curve is at 250 output per week. At the $20 price point, we see marginal revenue exceeded quantity of output of 150 and marginal cost and demand intersect at this price of $20 at an output of 300 per week. At $18, we see that marginal revenue has not changed much. It's still between 150 and 200 quantity of output per week. And we also see, at this point, that the average total cost appears to be a quantity of 200 output week. That $15 marginal revenue is just below a quantity of output of 200 per week. We see a $15 of the marginal cost in an average total cost intersect at a quantity output just beyond 250 per week. And then we see that it moves on to the demand curve which is just about 350 per week.

Reference: Ref 13-2 Figure: A Profit-Maximizing Monopoly Firm


(Figure: A Profit-Maximizing Monopoly Firm) Use Figure: A Profit-Maximizing Monopoly Firm. This firm's cost per unit at its profit-maximizing quantity is:

Select one:

a. $8.

b. $20.

c. $15.

d. $18.



P, MR MC, ATC $50 MC ATC 100 150 200 250 300 400 Quantity of output (per week) Reference: Ref 13-2 Figure: A Profit-Maximizin
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Answer #1

As we know for a monopoly the profit maximizing output is at the point where Marginal Cost (MC) and Marginal Revenue (MR) are equal or the point where both curve intersects each other.

From Ref 13-2 figure we can see that the MC and MR curve intersects when output per week is 200 units which is profit maximizing output.

Now Cost per unit at the profit maximizing output is the average total cost (ATC) at the profit maximizing output. So the ATC at the profit maximizing output (i.e. 200) is $18.

The monopoly firm's cost per unit at its profit-maximizing quantity is $18.

So, Option d. $18 is correct

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Figure: A Profit-Maximizing Monopoly Firm Reference: Ref 13-2 Figure: A Profit-Maximizing Monopoly Firm (Figure: A Profit-Maximizing...
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