For the next four questions, consider the following graph of a profit-maximizing
ID: 1224580 • Letter: F
Question
For the next four questions, consider the following graph of a profit-maximizing firm under monopoly:
Match each curve with its proper label: Marginal Cost, Average Total Cost, Demand, Marginal Revenue
The firm will determine the quantity to sell by finding where Curve _____ meets Curve ______.
Calculate the firm's total revenue at the profit-maximizing quantity.
Calculate the firm's profit or loss at the profit-maximizing (or loss-minimizing) quantity. Enter a positive number (no sign) for a profit and a negative number (with negative sign) for a loss.
Price Cost Curve A Curve B $179 - $98 -- Curve C urve 640 700 740 775 QuantityExplanation / Answer
Curve A: Marginal Cost
Curve B: Average Total Cost
Curve C: Demand
Curve D: Marginal Revenue
The firm will determine the quantity to sell by finding where Curve MR meets Curve MC.
Total Revenue = Price * Quantity = $179 * 640 = $1,14,560
Profit = TR - TC = $1,14,560 - ($98 * 640)
= $1,14,560 - $62,720
= $51,840