18 MC TC 10 3 5 6 78 Figure 1 35 If the monopolist depicted

18 MC TC 10 3 5 6 78 Figure 1 35) If the monopolist depicted in the figure above is maximizing profits, the correct price & output combination will be: A) price-6, quantity-6. B) price-3, quantity-5 C) price-10, quantity-5. D) price-8, quantity-7. 36) If the monopolist depicted in the figure above is maximizing profits, the actual profit earned will be: A) 20 B) 15 C) 35. D) 40

Solution

Q1. Answer is B. Price = $3; Output: 5 units Explanation: Maximizing profit point is where MC=MR. Q2. Answer is B. $ 15. Explanation: At Quantity =5, ATC = 7 and AR =10 Profit per unit = 10-7 = 3 per unit Total profits: 5 units @3 = $ 15.