Use the following to answer question:
Figure: Monopoly Model
-(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its profit is the area of rectangle:
A)SPDB.
B)IPDH.
C)ISBH.
D)0PDJ.

Question

Use the following to answer question:
Figure: Monopoly Model 
-(Figure: Monopoly Model)Use Figure: Monopoly Model.When the firm is in equilibrium (that is,maximizing its economic profit),its profit is the area of rectangle:
A)SPDB. 
B)IPDH. 
C)ISBH. 
D)0PDJ.

Quizplus · Accepted Answer

Economic profit is the difference between total revenue (TR) and total cost (TC) or (P-ATC) multiplied by the quantity of output. In the figure, the profit-maximizing quantity is Q* and the corresponding price is P*. The economic profit is SPDB, since it represents the rectangle bounded by the price (P*), the quantity (Q*), the average total cost curve (ATC), and the y-axis.

Use the Following to Answer Question