**Graph Analysis: Maximizing Profit for a Monopolist**In the provided graph, the relationship between price and quantity per day is depicted to help understand how a monopolist maximizes profit.**Graph Explanation:**1. **Axes:** - The vertical axis represents the price, ranging from $0 to $20. - The horizontal axis represents the quantity per day, ranging from 0 to 800 units.2. **Curves:** - **Demand Curve (D):** This downward-sloping curve shows the relationship between the price and the quantity demanded by consumers. - **Marginal Cost Curve (MC):** This upward-sloping curve shows the cost of producing one additional unit of output. - **Average Cost Curve (AC):** This U-shaped curve shows the average cost of production for different output levels. - **Marginal Revenue Curve (MR):** This downward-sloping curve below the demand curve represents the additional revenue generated from selling one more unit.3. **Equilibrium:** - The intersection of MR and MC curves determines the quantity of output where profit is maximized for a monopolist. - At this point (Q = 600 units), the marginal cost (MC) is equal to the marginal revenue (MR).**Question:**"Refer to the graph shown. Assuming that this monopolist maximizes profit, the marginal cost of its last unit of output will be:"**Options:**1. $162. $103. $124. $8**Answer:**The correct answer can be identified by locating the intersection of the MR and MC curves, which corresponds to the profit-maximizing quantity. At a quantity of 600 units, the marginal cost (MC) value at this point is $8. Thus, the marginal cost of the last unit of output is **$8**.

The monopolist is only single seller in the market. The profit is maximized where the MR=MC.

Answered: Refer to the graph shown. Assuming that…

Refer to the graph shown. Assuming that this monopolist maximizes profit, the marginal cost of its last unit of output will be: O $16. O $10. $12. O $8.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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