The marginal revenue curve of a monopoly crosses its marginal cost curve at $\backslash (30$per unit and an output of $2$million units. The price that consumers are willing to pay for this output is $\backslash )40$per unit. If it produces this output, the firm's average total cost is $\$43$per unit. What is the profit-maximizing (loss-minimizing) output? What are the firm's economic profits (or economic losses)?

Theincremental cost of production isa very important concept in managerial accounting,because it can helpa company optimize its production through economies of scale.
A company can maximize its profits by producing to wherecost (MC) equals marginal revenue (MR).

Its cost curve at per unit and an output of $2$ million units. the worth that customers are willing to obtain this output is $\$40$per unit. If it produces this output, the firm's average total cost is $\$43$ per unit.

A firm can maximize its output at the amount where marginal revenue equals differential cost. As given, marginal revenue curve of monopoly crosses incremental cost curve at the output of two million units. Thus, the profit maximizing or loss minimizing level of output is$\$2$ million units.

The economic profit is measured by considering the value that customers are willing to pay and therefore the average total cost. the worth that buyers are willing to pay is $\$40$ and therefore the average total cost$\$43$ per units. the subsequent may be a measurement of firm's economic profit.

$\text{The profit}=(P-ATC)\times \text{output}$

$=\mathrm{\$}40-\mathrm{\$}43\times 2\text{million}$

$=-6million$