Part I: Multiple Choice Questions Figure: A Profit-Maximizing Monopoly Firm Pric

Question

Part I: Multiple Choice Questions Figure: A Profit-Maximizing Monopoly Firm Price, marginal revenue, marginal cost, average total cost $35... ATC MC 26. 5 MR 160 220 250 300 Quantity of output (per week) 1 (Refer to Figure A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's cost per unit at its profit-maximizing quantity is: ( A) S8. B) S15. C) $16. D) $18. 2 Refer to Figure A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizin Monopoly Firm. This firm's profit per unit is: A) $5. B) $13. C) $14 D) $20

Explanation / Answer

Question 1:

The firm's profit maximisation point is where MC = MR

Therefore the profit maximising output is 220, so the corresponsing cost per unit is $8.

Question2:

Consider the point on the demand curve corresponding to quantity 220. It gives Price $28. This is selling Price.

Profit = MC - Price = 28 - 8 = $20

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