Graph 15-3 This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s).
-Refer to Graph 15-3.A profit-maximising monopoly would have profit equal to:
A)(P₃ - P₀) * Q₂
B)(P₃ - P₀) * Q₄
C)P₃ * Q₂
D)P₂ * Q₄

Question

Graph 15-3  This graph reflects the cost and revenue structure for a monopoly firm.Use the graph to answer the following question(s).
-Refer to Graph 15-3.A profit-maximising monopoly would have profit equal to:
A)(P₃ - P₀) * Q₂ 
B)(P₃ - P₀) * Q₄ 
C)P₃ * Q₂ 
D)P₂ * Q₄

Quizplus · Accepted Answer

A profit-maximizing monopoly sets output where marginal cost equals marginal revenue, which is typically at quantity Q₂. The profit is the difference between price (P₃) and average total cost (P₀) at that quantity, multiplied by the quantity (Q₂).

Graph 15-3 This Graph Reflects the Cost and Revenue