142 IT D 34 Refer to the figure below How much profit does

142%\" IT D. / 34. Refer to the figure below. How much profit does the profit-maximizing monopoly earn? MC Arc $10.00.. $4.00- Demand 0 600 IR Units of output, Q a. $0; b $6,000; c. $5,040; d. $10; e. $960 Refer to the figure below. From the structure of cost and revenue of the firm, we would predict that this monopoly will: a. Shut down in the short run, and go out of business in the long run. b.Shut down in the short run, but continue to operate in the long run. c. Operate in the short run, but go out of business in the long run. d. Qperate 10

Solution

34. $960 (Explanation: 1.40 x 600)

35. Operate (Explanation: Because price is greater than AVC)

36. Area C

37. $15 (Explanation: At $15, the condition for profit maximization MR = MC fulfills.

38. Along the decreasing portion of the long-run average cost curve(LRAC), up until Q₀