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 a total revenue 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 a total revenue equal to:
A)(P₃ - P₀) *Q₂ 
B)(P₃ - P₀) * Q₄ 
C)P₃ *Q₂ 
D)P₂ *Q₄

Quizplus · Accepted Answer

A profit-maximizing monopoly will produce at the quantity where marginal revenue equals marginal cost. At this quantity, total revenue will be maximized. In Graph 15-3, the profit-maximizing monopoly will produce Q₂ units of output and sell them at a price of P₃. Total revenue will be equal to P₃ * Q₂.

Graph 15-3 This Graph Reflects the Cost and Revenue