Question

Look at the following information and answer the following questions a) Al which price and quantity does this firm ise profit m b) Does this im generate economic profit? If so, how much economic profit does it generate in total? c) What business form is being depicted here? A. a) R200 Yes, R2 250 Monopoly El al R2000 Yes. 2350 Perfect competition C. R20 Yes. R250 Oligopoly

Answer 1

Answer a

The profit will be maximum at a point of intersection of Marginal Revenue and Marginal cost. Intersection is happening at 90,125. If we draw a vertical line along the 90 quantity we get the price of 200 at demand of 90 from demand curve.

Hence profit maximization price is 200 and quantity is 90

Answer b

The vertical line along the 90 quantity intersect the ATC curve at price of 175

Hence profit per unit= selling price- ATC =200-175=25

Total profit=90*25=2250

Answer c

Since only one firm is present and is controlling the demand. The monopoly market is depicted