SharePoin 34. Refer to the figure below. How much profit does the proft marimizi

Question

SharePoin 34. Refer to the figure below. How much profit does the proft marimizing monopoly earn?- MC ATC Demand Units of output, Q a. $0: b 35. Refer to the figure below. c. $5,040; From the structure of cost and revenue of the firm, we would d $10 e$960 predict that this monopoly will: a Shut down in the short run, and go out of business in the long run b. Shut down in the short run, but continue to operate in the long run c. Operate in the short run, but go out of business in the long run d. Operate MR Units of outpat. Q

Explanation / Answer

Q34. Answer is e. $ 960 Explanation: At MR=MC, equilibrium price = 10, ATC =8.40 hence profit per unit: 1.60 per unit Equilibrium quantity: 600 units Total profit: 600*1.60 = $ 960 Q35. Answer is C. Operate in shrt run and go out of business in long run. Explanation: In the shrt run, the firm is collecting revennue more thn variable cost, hence the fixed cost is recovered. However, in long run the firm will not do business as it is not recovering its total cost. Q36. Answer is a. Area C. Q37. Answer is b. $ 15. Explanation: Equlibrium price is a point f perpendicular at Average revenue curve when perpendicular drwn from the point where MR=MC.

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