Question

Part II Monopoly P ATC 20 MC 17 15 13 9 6 D 0 40 50 55 90 Q MR A) What is the profit maximizing output level for this monopolist? B) What is the profit maximizing price this monopolist will charge? C) The total revenue of this monopolist is equal to? D) What is the ATC of this monopolist when it maximizes its profit? E) What is the total cost of producing the profit maximizing output? F) How much profit does this monopolist earn when it maximizes its profit? G) What is the profit per unit when the monopolist maximizes its profit? H) What production period is this monopolist producing in? I) What should this monopolist do? J) Explain why it should do this.

I need help with parts H, I, and J only please

Answer 1

H) Monopolist is producing in short run production period because it is having losses and in long run monopolist never have losses.

I) Monopolist should leave the industry in long run because his costs are higher than revenues and he can not bear the losses for long run.

J) Because he is facing losses

Total cost = Quantity * ATC = 17 * 40 = 680

Total revenue = quantity * price = 15 * 40 = 600

So he is having losses equal to $80 and can not go in long run with losses. So he should left the industry.

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