A monopolist charges a price of $15 per unit. A the point of intersection of the...

A monopolist charges a price of $15 per unit. A the point of intersection of the marginal revenue and marginal cost curves, the output was 10 units and the marginal cost was $7. Average total cost for 10 units of output was $7. What is this monopolist’s profit?

Hint: Profit = Total Revenue - Total Cost

Total Revenue = Price x Quantity

Total Cost = Average Total Cost x Quantity

	a.	$80
	b.	$70
	c.	$120
	d.	$150

Solutions

Expert Solution

At the profit maximizing output level of 10 units, price = $15 per unit and ATC = $7.

Total revenue at the profit maximizing output = $(15*10) = $150 and Total cost = $(7*10) = $70

The monopoly's profit = TR - TC = $(150 - 70) = $80

Answer: option A

Rahul Sunny answered 1 year ago

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