Find on page perfect No resalts options v 30 2 820 MC AC 16

Find on page perfect No resalts options v 30. 2 8$20 MC AC $16 $14 $12 58 2 0 300 6 700 800 Quantity per day the monopoist depicted nahe groph above sets the price to maximizeprf earn ecorlomic profit of O s2400 per dey O $4800 per dey O $7.200 per day ? $1,600 per day

Solution

The profit-maximizing output is at the point where MR=MC i.e 600 units. The price set is the vertically corresponding point on the demand curve i.e. $16. The profit per unit will be the difference between the price and the average cost at those number of units. The price is $16 and the AC is $12. So the economic profit per unit is $4. Accordingly, for 600 units, the economic profit is 600 x $4 = $2400. Hence the correct answer is (A) i.e $2400 per day.