Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 15 - Part V - Monopoly - Questions for Review - Page 323: 4

Answer

Please see the graph.

Work Step by Step

The average total cost curve intersects the marginal cost curve at the minimum point on the average total cost curve. The intersection of the marginal cost curve and the marginal revenue curve determines the quantity the monopolist will produce (and at what price will the monopolist sells the good). The shaded rectangle is the profit for the monopolist. This rectangle is the difference between the price and the average total cost, and this difference is multiplied by the quantity (to get the profit).
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