Use Pic 2 for questions 45 Pic 2 MC ATC P3 MR and Curve a Qi

Use Pic. 2 for questions 4-5 Pic. 2 MC ATC P3 MR and Curve a. Qi Q3 4. Pic. 2 shows the average total and marginal costs of the monopolist and the market demand curve. According to this picture, the monopolist\'s price and quantity will be A. pi, Qi B. p2, Q2 C. ps, Qs D. a price and a quantity different from the ones shown on the picture. 5. The monopolist of pic. 2 will earn A. zero profits B. negative profits C. positive profits D. negative or positive profits, depending on its output 6. The monopolist\'s price will be A. equal to its marginal cost B. equal to its marginal revenue C. greater than its marginal cost D. less than its marginal revenue

Solution

Q4. Answer is D. a price and a quantity different from the one shown in the picture. Explanation: Price is P2 but the equilibrium quantity is less than Q1. Q5. Answer is C. Positive profits. As Average revenue is more than the average total cost at equilibrium quantity. Q6. Answer is C. greater than marginal cost.