Use the following to answer question:
Figure: A Rock Climbing Shoe Monopoly
-(Figure: A Rock Climbing Shoe Monopoly) Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to:

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Use the following to answer question:
Figure: A Rock Climbing Shoe Monopoly

-(Figure: A Rock Climbing Shoe Monopoly) Use Figure: A Rock Climbing Shoe Monopoly.If the firm acts to maximize profit,the firm will earn profit equal to:

Quizplus · Accepted Answer

To maximize profit, the firm should produce where marginal revenue (MR) equals marginal cost (MC), which is at output QS1U1B12S1U1B0. At this output level, the price is PS1U1B14S1U1B0, which is the height of the demand curve. The firm's marginal cost is PS1U1B11S1U1B0, which is the height of the supply curve (assuming this is the firm's short-run supply curve). Therefore, the profit per unit is PS1U1B14S1U1B0 - PS1U1B11S1U1B0 = PS1U1B3S1U1B0. Multiplying this profit per unit by the output level QS1U1B12S1U1B0 gives a total profit of (PS1U1B11S1U1B0 - PS1U1B14S1U1B0) × QS1U1B12S1U1B0.

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