1. The profit maximizing output for this firm is . 2. In the short-run, this firm will earn $ 3. In the long-run, this firm will earn $ please refer to figure provided ### Understanding Monopoly Pricing: A Graphical AnalysisThis graph represents the pricing and quantity decisions of a monopolistic firm, illustrating key economic concepts such as marginal cost (MC), average total cost (ATC), marginal revenue (MR), and demand.#### Key Components of the Graph:1. **Demand Curve**: The downward-sloping line represents the demand curve. It shows the relationship between the price of the good (on the vertical axis) and the quantity demanded (on the horizontal axis). As the price decreases, the quantity demanded increases, which is typical in most markets.2. **Marginal Cost (MC)**: The MC curve intersects the ATC curve and tends to upward slope, indicating the additional cost incurred by producing one more unit of the good. This curve is crucial as it determines the optimal production point for the monopolist.3. **Average Total Cost (ATC)**: The ATC curve also slopes downwards initially, reaches a minimum, and then starts to slope upwards. This U-shaped curve represents the per-unit cost of production, including both fixed and variable costs.4. **Marginal Revenue (MR)**: The MR curve is downward sloping, lying below the demand curve. It shows how the revenue from selling one more unit changes as output increases. For a monopolist, the MR is lower than the price due to the need to decrease the price to sell more units.#### Points of Intersection and Economic Implications:- The **MC intersects the MR** at **point A** around a quantity of 10 units and a price of $18. This is where the firm maximizes its profit by equating MR to MC, following the profit-maximization rule. - The **MC curve intersects the ATC curve** at around a quantity of 13 units, which is the minimum average total cost.- The **Demand curve intersects the MC curve** at around a quantity of 18 units and a price of $10, indicating the socially optimal level of output where price equals marginal cost.The price and quantity that the monopolist chooses (where MR = MC) do not necessarily lead to allocative efficiency, where the price would equal the marginal cost (as it does in perfectly competitive markets). Instead, the monopolist restricts output and raises prices to maximize profits, often resulting in a deadweight loss to society.This graphical analysis provides a visual understanding of how monopolies operate in setting prices and quantities differently from competitive markets

The monopoly is a market structure which has a single seller and many buyers in the market. The…

Answered: 1. The profit maximizing output for…

1. The profit maximizing output for this firm is . 2. In the short-run, this firm will earn $ 3. In the long-run, this firm will earn $ please refer to figure provided

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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