The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. Price ($ per unit) 10 9 8 7 6 5 4 3 2 1 0 0 1 2 MR 3 4 5 6 Quantity (millions of units) 7 MC 8 D 9 ATC 10 Profit

The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. Price ($ per unit) 10 9 8 7 6 5 4 3 2 1 0 0 1 2 MR 3 4 5 6 Quantity (millions of units) 7 MC 8 D 9 ATC 10 Profit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

O Macmillan Learning
The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits.
1. Place point E at the monopoly's profit maximizing price and quantity.
2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit.
3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit.
Price ($ per unit)
10
9
8
7
6
5
3
2
1
0
0 1
E
K
MR
2
3 4
5
6
Quantity (millions of units)
7
MC
8
D
ATC
9 10
Profit

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