The following diagram shows the demand curve, D, the marginal revenue curve, MR,

Question

The following diagram shows the demand curve, D, the marginal revenue curve, MR, cost curve, MC, facing a monopolist. Refer to the diagram above. At the profit-maximizing level of output, the total revenue equal to the area 0A. 0CEA. 0GIH 0BKA. 0C. Refer to the diagram above. If the price in this market is initially move to the equilibrium, does the quantity supplied increase or The quantity supplied decreases by 40 units. The quantity supplied decreases by 20 units. The quantity supplied remains unchanged. The quantity supplied increases by 20 units. The quantity supplied increases by 40 units.

Explanation / Answer

Q24 The profit maximizing level of output will be when MC=MR i.e. the point at which MR and MC curve intersects. So profit maximizing quantity is A. Quantity A intersects demand curve at E and the price paid at E is C. So company will be selling A units at price C so the Total revenue = Area of rectance OCEA

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