The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. At the socially optimal level of output, this monopolist would:
A)earn an economic profit of $16.
B)incur an economic loss of $16.
C)incur an economic loss of $64.
D)incur an economic loss of $112.

Question

The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist.  At the socially optimal level of output, this monopolist would:
A)earn an economic profit of $16. 
B)incur an economic loss of $16. 
C)incur an economic loss of $64. 
D)incur an economic loss of $112.

Quizplus · Accepted Answer

The monopolist would lose $8 on each of 8 units sold.

The Accompanying Figure Shows the Demand Curve, Marginal Revenue Curve