Use graphs to demonstrate your answer . What is the profit maximizing-output and price of a...

Question:

Use graphs to demonstrate your answer .

What is the profit maximizing-output and price of a monopolist?

Also show the area of economic profits at the profit maximizing rate of output.

Profit Maximization:

Profit is maximized when the marginal revenue (i.e., change in total revenue divided by change in output) equals the marginal cost (i.e., change in total cost divided by change in output).

Answer and Explanation:

Note: the graph is missing.

The profit-maximizing output is the level of production where marginal revenue equals the marginal cost. And, the profit equals the market price minus the average cost times the profit-maximizing output.


Learn more about this topic:

Profit Maximization: Definition, Equation & Theory

from Intro to Business: Help and Review

Chapter 24 / Lesson 6
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