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Chapter 25: Q. 17 (page 576)

Take a look at Figure 24-6. Suppose that Qm is 9.5 units per week, that Pm is \(6.10 per unit, and that the average total cost of producing the 9.5 units is \)4.26 per unit. What is the dollar amount of maximized monopoly profits displayed by the green area?

Short Answer

Expert verified

The dollar amount of maximized monopoly profits displayed by the green area is$17.48

Step by step solution

01

Introduction

A monopoly is a solitary dealer.

In legislation, promoting is a company element with large market power, capacity to charge exorbitant prices, which is linked to a decrease in pleasant overabundance.

02

Explanation

The total cost for the firm is,

Totalcost=averagetotalcost×outputquantity

=4.26×9.5=$40.47

The total revenue earned is,

Totalrevenue=Averagerevenue×outputquantiy=6.10×9.5=$57.95

Totalprofit=totalrevenue-totalcost

=$57.95−$40.47=$17.48

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