Figure 15-18
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals
A)$0.
B)$1,000.
C)$2,000.
D)$4,000.

Question

Figure 15-18 
-Refer to Figure 15-18. If there are no fixed costs of production, monopoly profit without price discrimination equals
A)$0. 
B)$1,000. 
C)$2,000. 
D)$4,000.

Quizplus · Accepted Answer

Monopoly profit is calculated by finding the difference between total revenue and total cost. In this case, the monopolist can set the price at $4,000 and sell 1,000 units, resulting in total revenue of $4,000 x 1,000 = $4,000,000. Since there are no fixed costs, the total cost is simply the variable cost (which is constant at $2,000 for each unit produced) multiplied by the quantity produced (1,000 units), which equals $2,000,000. Thus, monopoly profit without price discrimination equals total revenue minus total cost, or $4,000,000 - $2,000,000 = $2,000,000.

Figure 15-18 -Refer to Figure 15-18. If There Are No Fixed Costs