Question

How to determine the profit maximizing price and quantity for a single price monopolist ? Using ATC as Average total cost, P as price and MC as Marginal cost ?

Answer 1

Answer on Question # 77113, Economics -Microeconomics:

Question: How to determine the profit maximizing price and quantity for a single price monopolist? Using ATC as Average total cost, P as price and MC as Marginal cost.

Solution: In a monopoly market, the marginal revenue curve and the demand curve are distinct and downward-sloping. Production occurs where marginal cost and marginal revenue intersect.

MC = MARGINAL COST, ATC = AVERAGE TOTAL COST, MR = MARGINAL REVENUE, D = DEMAND

Now from the graph $Q_{1}$ is the profit maximizing quantity (MR = MC), maximizing price = P2.

Answer: $Q_{1}$ and $P_{2}$ .

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