A monopoly has a constant marginal cost of production of $4 per unit and no fixed costs. In the figure to the right, let D be demand and MR be marginal revenue. 1.) Using the line drawing tool, graph the monopoly's marginal cost curve. Label this curve 'MC. 2.) Using the line drawing tool, graph the monopoly's average variable cost curve. Label this curve 'AVC.' 3.) Using the line drawing tool, graph the monopoly's average cost curve. Label this curve 'AC.' 4.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity. Label this point 'e.' 5.) Using the rectangle drawing tool, shade in the monopoly's profit. Label this 'profit.' 6.) Using the triangle drawing tool, shade deadweight loss created by the monopoly. Label this 'DWL.' Carefully follow the instructions above, and only draw the required objects.

A monopoly has a constant marginal cost of production of $4 per unit and no fixed costs. In the figure to the right, let D be demand and MR be marginal revenue. 1.) Using the line drawing tool, graph the monopoly's marginal cost curve. Label this curve 'MC. 2.) Using the line drawing tool, graph the monopoly's average variable cost curve. Label this curve 'AVC.' 3.) Using the line drawing tool, graph the monopoly's average cost curve. Label this curve 'AC.' 4.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity. Label this point 'e.' 5.) Using the rectangle drawing tool, shade in the monopoly's profit. Label this 'profit.' 6.) Using the triangle drawing tool, shade deadweight loss created by the monopoly. Label this 'DWL.' Carefully follow the instructions above, and only draw the required objects.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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