The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm’s revenue equal? Question 2 options: the area of rectangle ABGH the area of rectangle BDEG the area of rectangle BCFG the area of rectangle ADEH This graph illustrates a typical structure used in economic analysis, representing various cost and revenue curves faced by a firm under different market conditions.### Labels and Curves:- **Vertical Axis (Y-axis):** Measures Price (P), Marginal Revenue (MR), Average Cost (AC), and Marginal Cost (MC). - **Horizontal Axis (X-axis):** Measures Quantity.### Curves:1. **Demand Curve:** Slopes downward from left to right, indicating the inverse relationship between price and quantity demanded.2. **Marginal Revenue (MR) Curve:** Lies below the demand curve, reflecting that marginal revenue decreases as quantity increases.3. **Average Cost (AC) Curve:** U-shaped, representing the average cost per unit at different levels of production.4. **Marginal Cost (MC) Curve:** Typically upward sloping, intersecting the AC curve at its lowest point, showing the additional cost of producing one more unit.### Key Points and Lines:- **Point D:** Corresponds with a higher price level on the demand curve.- **Point E:** The point where the MC curve intersects the demand curve, indicating the profit-maximizing level of output under perfect competition.- **Point F:** The point where the MR curve intersects the MC curve, indicating the firm's profit-maximizing output.- **Levels A, B, C, G, H:** Horizontal dashed lines representing different price or cost levels. - **Line A-G-H:** Represents the minimum cost and related output levels. - **Line B-G-C:** Connects the price under marginal cost conditions to the average cost.### Analysis:- **Profit Maximization:** Occurs where the MR curve intersects the MC curve (at Point F). This is where firms maximize profit by aligning cost with revenue for optimal output.- **Costs and Revenue Intersection:** The graph effectively represents how a firm adjusts its production to achieve economic efficiency, balancing between marginal cost and revenue while considering demand and average costs.This analysis forms the foundation for understanding firm behavior in different competitive environments, aiding in better decision-making for optimizing performance in markets.

Monopoly: - monopoly market structure is the structure in which there is only one seller of any good…

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm’s revenue equal? Question 2 options: the area of rectangle ABGH the area of rectangle BDEG the area of rectangle BCFG the area of rectangle ADEH

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm’s revenue equal? Question 2 options: the area of rectangle ABGH the area of rectangle BDEG the area of rectangle BCFG the area of rectangle ADEH

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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