Use Figure 113 to answer questions 28 29 and 30 The followin

Use Figure 11.3 to answer questions 28, 29, and 30. The following figure shows the revenue and cost curves of a monopolist Figure 11.3 ?? ATC Pt Ps MA Quantty D: Average Revenue MR: Marginal Revenue ATC: Average Total Cost MC: marginal Cost 28. Consider the monopolist described in Figure 11.3. If the firm engages in profit-maximizing behavior what price will it charge? a. P b. P ?.?? d. P e. Ps 29. Consider the monopolist described in Figure 11.3. The firm can maximize profit by producing a. zero units b. Ql units c. Q2 units d. Q3 units e. Q4 units 30. Consider the monopolist described in the Figure 11.3. If the firm engages in profit- maximizing behavior, economic profit per unit of output will be: a. 0 b. P c. Pa minus P d. Ps minus P e. Ps minus P

Solution

28. The monopolist will maximize his profit at MR = MC

therefore the firm engaged in profit maximization will charge a price P₅.

Answer is e. P₅

29. The monopolist will charge a price P₅ and will be selling Q₂

Answer option c. Q₂

30. In this case the price is equal to Average Total Cost at the profit maximizing output. Hence the monopolist has zero economic profit.

Answer option a. Economic Profit = ZERO(0)