The Power Company ATC Mc MR 13. Consider the monopoly in the graph above. The mo

Question

The Power Company ATC Mc MR 13. Consider the monopoly in the graph above. The monopoly will charge the price: d. D 14· Consider the monopoly in the graph above. The firm is: Making an economic profit. b. Is making economic losses. c. Is making accounting losses. d. Making normal profits. 15. Consider the monopoly in the graph above. In the long run a. Firms will exit the market and the profits will rise. Firms will enter the market and the profits will fall. No firms will exit or enter the market and the price will fall. b. c. No firms will enter the market and the profits will be unchanged.

Explanation / Answer

Q13

Answer

The monopoly proudce at MR=MC

and find the price from the demand curve

so the MR=MC where P=B

Q14

Answer

Profit=(P-ATC)*Q

The ATC<P

ATC=C and P=B

so the firm is earning the profit

Q15

Answer

Option D

the entry is restricted so no firm will enter the market and the profit will be unchanged if all other factors are constant.

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