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 cost equal to:
A)P₀ * Q₁
B)P₀ * Q₂
C)P₀ * Q₃
D)(P₁ - P₀) * Q₂

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 cost equal to:
A)P₀ * Q₁ 
B)P₀ * Q₂ 
C)P₀ * Q₃ 
D)(P₁ - P₀) * Q₂

Quizplus · Accepted Answer

A profit-maximizing monopoly sets its output level where marginal revenue equals marginal cost, which corresponds to Q₂ on the graph. The total cost is then the area under the average total cost curve up to Q₂, which is represented by $P_0 \times Q_2$.

Graph 15-3 This Graph Reflects the Cost and Revenue