Table 15-8 The following table provides information on the price, quantity, and average total cost for...

Table 15-8 The following table provides information on the price, quantity, and average total cost for a monopoly.

Price	Quantity	Average Total Cost
$24	0	---
$18	5	$14.00
$12	10	$11.00
$6	15	$10.67
$0	20	$11.00

Refer to Table 15-8. What is the maximum profit that the monopolist can earn?

A. $20

B. $10

C. $40

D. $30

Expert Solution

Option (A).

Profit = Q x (P - ATC)

P	Q	ATC	PROFIT
24.00	0.00	---
18.00	5.00	14.00	20
12.00	10.00	11.00	10
6.00	15.00	10.67	-70.05
0.00	20.00	11.00	-220

Profit is highest (= 20) when Q = 5 units.

Rahul Sunny answered 2 years ago

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