The marginal revenue curve of a monopoly crosses its marginal cost curve at $30 per unit and an...

Question:

The marginal revenue curve of a monopoly crosses its marginal cost curve at $30 per unit and an output of 2 million units. The price that consumers are willing and able to pay for this output is $40 per unit. If it produces this output, the firm's average total cost is $43 per unit, and its average fixed cost is $8 per unit. What is this producer's profit-maximizing (or loss-minimizing) output level and what are the firm's economic profits (or economic losses)?

Shut Down vs Exit:

A firm will exit a market if its total revenue is below its total cost in the long-run. A firm will shut down in the short-run if total revenue is below its total variable cost.

Answer and Explanation: 1

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What is this producer's profit-maximizing (or loss-minimizing) output level?

The profit-maximizing output level is where marginal revenue crosses...

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Marginal Revenue: Definition & Equation

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Chapter 2 / Lesson 13
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Learn about marginal revenue and understand how to use the marginal revenue formula. See how to calculate marginal revenue and the impact of price and marginal cost.


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