Question
In: Economics
The marginal revenue curve of a monopoly crosses its marginal cost curve at $31 per unit,...
The marginal revenue curve of a monopoly crosses its marginal cost curve at $31 per unit, and an output of 2 million units.
What is the profit-maximizing (loss-minimizing) output? () million units.
The price that consumers are willing to pay for this output is $39 per unit. If it produces this output, the firm's average total cost is $41 per unit, and its average fixed cost is $5 per unit.
What are the firm's economic profits (or economic losses)? $()
Solutions
Expert Solution
profit-maximizing (loss-minimizing) output is where MR =MC
Here MR = MC at an output level of 2 million units
So profit-maximizing (loss-minimizing) output is 2 million units
P = 39, ATC = 41
Profit / loss = (P-ATC )* Q
Profit / loss = (39 - 41) * 2000000 = -4000000
economic loss = 4000000 or 4 million
Rahul Sunny answered 2 years agoRelated Solutions
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