Question

Refer to Exhibit 9.3, which shows the cost and revenue curves for a non-discriminating monopolist. The total cost incurred by the monopolist for producing the profit-maximizing output is _____ Group of answer choices $16,500. $24,200. $16,200. $19,800. $30,800.

Answer 1

Answer: $19,800

Explanation;

The Monopolist will maximize output at the point where Marginal Revenue equals Marginal Cost because at this point all resources are being fully utilized.

Total Cost = Average Total Cost * Quantity produced

At the point where MR=MC, the quantity produced is 1,100 units.

The Average Total Cost tallying with this is $18 per unit.

Total Cost = 18 * 1,100

= $19,800