**Question 5***(Figure: Monopoly Pricing and Output Decisions)* Based on the graph, what is the equilibrium price for this monopolist?**Graph Explanation:**The graph represents a monopolist's pricing and output decisions with the following curves:- **MC (Marginal Cost):** This curve slopes upward, indicating increasing costs as output increases.- **ATC (Average Total Cost):** This curve typically slopes downward initially and then upward, representing economies and diseconomies of scale.- **MR (Marginal Revenue):** This curve slopes downward, reflecting decreasing additional revenue with each additional unit sold.- **D (Demand):** This curve is downward sloping, showing the inverse relationship between price and quantity demanded.The intersection of the MC and MR curves determines the monopolist's output level. Vertical line from this intersection shows the output level on the x-axis. The demand curve (D) is used to find the corresponding price level on the y-axis, which is the equilibrium price.The shaded area represents possible consumer surplus or profit.**Answer Choices:**- A. $30 - B. $16 - C. $20 - D. $12

The monopoly market is a market which includes a single seller who is the sole activist in the market and indulges in production of a product without close substitutes. The monopolist involve in price discrimination and demand different prices from different types of consumers. The market has different markets for different revenues.Option A is correct Option A is correct because according to the graph, the monopolist will charge a price corresponding to the equilibrium condition of equality between the marginal revenue and the marginal cost as extended towards the demand curve of the monopolist. So, $30 will be the equilibrium price charged. Option B is incorrect because $16 is much lower than the marginal cost as well and in a monopoly market, the prices remain higher than the marginal cost. Option C is incorrect because $20 is the minimum point of the average cost curve where the firm can take a decision to shut down. Option D is incorrect because $12 is also less than the marginal cost where in a monopoly market the marginal cost is also less than the price.Hence, the monopoly market is a form that is a discriminating market and the producer is a single one selling products without close substitutes.

Answered: Based on the graph, what is the…

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Based on the graph, what is the equilibrium price for this monopolist? 45 40 MC ATC 30 25 20 15- 10 MR 8. 10 12 14 16 18 20 22 26 Output O A. $30 O B. $16 OC. $20 O D. $12 24 4. Price and Cost ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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