IS the 45 40 MC ATC 30 25 15 10아 MR 8 10 14 Output 12 16 20 22 26 O A. 5 units O B. 20 units O C. 16 units O D. 12 units 24 18 16 ---- 2. Price and Cost ($)
IS the 45 40 MC ATC 30 25 15 10아 MR 8 10 14 Output 12 16 20 22 26 O A. 5 units O B. 20 units O C. 16 units O D. 12 units 24 18 16 ---- 2. Price and Cost ($)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Step 1
In the monopoly market, there is a presence of a single seller selling a unique product in the market. As a result, the market demand curve and the demand curve of the monopolist coincide. Because of the restriction on the entry to the market, a monopolist earns supernormal profit even in the long run.
Step 2
A monopolist determines its equilibrium price and output by setting marginal revenue (MR) equal to marginal cost (MC). From the given figure, the output level corresponding to equality of marginal revenue and marginal cost (point c) is 12 units.
Thus, the equilibrium output level for the monopolist is 12 units.
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