Suppose the the monopoly shown in the graph above sells 20 units at $30 each: Ba
ID: 1224629 • Letter: S
Question
Suppose the the monopoly shown in the graph above sells 20 units at $30 each:
Based on the graph calculate the firm's profit per unit ________________
Based on the graph calculate the firm's total profit___________________
When economic profits are positive in a monopoly market firms will _________________, and profits will __________________.
A. Exit; increase
B. Stay put; not change
C. Enter; decrease
D. Enter; no change
Consider the following graph: 15 Price and cost per unit $30 MC ATC 21 18 MR 20 33 35 40 QuantityExplanation / Answer
FIRMS PROFIT PER UNIT AT 20 UNITS WILL BE PRICE - ATC, WHERE ATC AS PER THE GRAPH IS $18
PER UNIT PROFIT WILL BE = 30 - 18 = $12.
FIRMS TOTAL PROFIT = 20* 12 = $240.
WHEN ECONOMIC PROFITS ARE POSITIVE IN A MONOPOLY MARKET FIRM WILL STAY PUT AND PROFITS WILL NOT CHANGE.
IN CASE OF MONOPOLY ENTRY AND EXIT OF FIRMS IS NOT ALLOWED.