Question

The graph below shows the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for a supplier of bottled water to commercial buildings. The firm operates as a local monopoly. Use the area tool to draw the rectangle that represents the firm's profit if the market quantity is 7,000 bottles.

Your answer should be a rectangle with four corners.  To refer to the graphing tutorial for this question type, please click here.

Answer 1

Answer 2

Price and cost (Sper Asogtie ATC 14 13 12 11 10 5.5 5 4 2 MR Quantity (thousands of bottles 15

.part 2)

Profit = (7-5.5)*7000

= 1.5*7000

= 10,500

for maximum profit in Monopoly, MR = MC

So at Q = 5000, & Price = 9