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Figure: Computing Monopoly Profit
-(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _____ and will generate total economic profit of _____.

Question

Use the following to answer questions:
Figure: Computing Monopoly Profit

-(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is _____ and will generate total economic profit of _____.

Quizplus · Accepted Answer

The profit-maximizing price for a monopoly is where marginal cost equals marginal revenue, which is P3. The total economic profit is the area of the rectangle between the price and average total cost at the profit-maximizing quantity, which is P2P3EF.

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