### Monopoly Demand and Cost AnalysisThis graph illustrates the demand curve faced by a pure monopolist. It demonstrates how marginal revenue (MR) and marginal cost (MC) interact for a monopolist, helping to determine the profit-maximizing price and output.#### Graph Details:- **Axes**: - The vertical axis represents the price in dollars ($), ranging from 0 to 10. - The horizontal axis measures quantity, extending from 0 to 1,000 units.#### Curves:- **Demand Curve (Blue)**: Downward sloping, indicating that as the price decreases, the quantity demanded increases.- **Marginal Revenue Curve (Light Blue)**: Also downward sloping, positioned below the demand curve. It shows the additional revenue generated from selling one more unit.- **Marginal Cost Curve (Orange)**: Upward sloping, representing the additional cost of producing one more unit.- **Average Total Cost Curve (Green)**: U-shaped, indicating the average cost per unit over different quantities.#### Key Point:- **MR=MC Point**: The black dot marks where the marginal revenue equals the marginal cost, the condition for maximizing profit for the monopolist.#### Question:What is the monopolist's profit-maximizing price and output?To answer this, identify where the MR and MC curves intersect. At the intersection point, move vertically to find the corresponding price on the demand curve. This price-quantity combination maximizes the monopolist's profit. **Monopolist's Profit Maximization**To determine the monopolist's profit-maximizing price and output, refer to the given graph:- **Price (in dollars):** [Input Box for Price]- **Output (in units):** [Input Box for Output]Below the graph, consider the economic implications for long-run profitability.**Question: Are positive long-run profits possible under this market structure?**- ☐ Positive long run economic profits are possible if barriers to entry remain high.- ☐ Positive long run economic profits are definite.- ☐ Long run economic profits will be zero.**Graph Details:**- The x-axis represents Quantity from 0 to 1,000.- This setup helps identify where the monopolist achieves maximum profit, typically where marginal revenue equals marginal cost on the graph.Consider the impact of entry barriers on maintaining long-term profits for a monopolist.

100 200 300 400 500 600 700 800 900 1,000 Quantity What is the monopolist's profit-maximizing price and output? price: $ output: units Are positive long-run profits possible under this market structure? Positive long run economic profits are possible if barrriers to entry remain high. Positive long run economic profits are definite. Long run economic profits will be zero.

100 200 300 400 500 600 700 800 900 1,000 Quantity What is the monopolist's profit-maximizing price and output? price: $ output: units Are positive long-run profits possible under this market structure? Positive long run economic profits are possible if barrriers to entry remain high. Positive long run economic profits are definite. Long run economic profits will be zero.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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