Here is a 4 question which have to answer base on this graph. **Title: Understanding Monopolist Profit Maximization**Referring to the accompanying diagram, analyze the following questions:a. What is the monopolist's profit-maximizing output?b. At the profit-maximizing output rate, what are the monopolist’s average total cost and average revenue?c. At the profit-maximizing output rate, what are the monopolist’s total cost and total revenue?d. What is the maximum profit?**Diagram Explanation:**The graph illustrates the cost and revenue curves for a monopolist, including:- **MC (Marginal Cost) Curve** - Upward sloping, intersects the MR curve at the profit-maximizing output.- **ATC (Average Total Cost) Curve** - U-shaped and provides the cost per unit at different output levels.- **D (Demand) Curve** - Downward sloping, indicates the price consumers are willing to pay at each quantity.- **MR (Marginal Revenue) Curve** - Downward sloping, lies below the demand curve, indicating the change in revenue from selling an additional unit.**Profit-Maximizing Output:**- The profit-maximizing output occurs where the MR curve intersects the MC curve. In this graph, it is approximately 7,000 units.**Average Total Cost and Average Revenue:**- At the profit-maximizing output, trace vertically to find average total cost on the ATC curve and average revenue (price) on the demand curve.- Average Revenue is about $5.00 per unit.- Average Total Cost is about $4.50 per unit.**Total Cost and Total Revenue:**- Total Revenue = Price (Average Revenue) × Quantity: $5.00 × 7,000 = $35,000- Total Cost = Average Total Cost × Quantity: $4.50 × 7,000 = $31,500**Maximum Profit:**- Maximum Profit = Total Revenue - Total Cost: $35,000 - $31,500 = $3,500This analysis helps in understanding how monopolists determine their output level to maximize profit, considering costs and revenue.

A monopolist is an individual, group, or company that controls the market for a particular product or service. This lack of competition and lack of substitute products or services means the monopolist holds enough power in the marketplace to charge high pricesMonopolist profit-maximizing output is achieved where marginal revenue is equal to marginal cost According to the above graph, MR=MC intersect at a point where 5000 units of output are produced. therefore the profit-maximizing output is 5000 unitsCalculation of ATC At 5000 units of output monopolist ATC = 5 per unit Calculation of Average Revenue According to the above graph AR = 5 Average revenue = TR/Q and therefore Average revenue equals the price. Calculation of Total Cost TC = ATC*Q TC = 5*5000 TC = 25,000 Calculation of Total Revenue TR = Price*Quantity TR = 6*5000 TR = 30,000Profit = TR - TC Profit = 30,000 - 25,000 Profit = 5,000

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Economics

5. Referring to the accompanying diagram, answer the following questions. a. What is monopolist's profit-maximizing output? b. At the profit-maximizing output rate, what are the monopolist's average total cost and average revenue?

5. Referring to the accompanying diagram, answer the following questions. a. What is monopolist's profit-maximizing output? b. At the profit-maximizing output rate, what are the monopolist's average total cost and average revenue?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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