If a monopoly firm is currently produce 100 units of outputs where price equals $7, average total cost equals $8 and marginal cost is increasing. Use ONE diagram to answer the following parts.

a) Draw a graph showing a monopolist in this short-run equilibrium. No explanation is required. Label the critical values on the diagram if the data are provided.

b) Calculate the amount of profit or loss. Indicate the area of it in your diagram.

c) How can an increase in demand help the monopolist to change the current situation of profitability from bad time to good time? Explain with the aid of your diagram. Label the areas of profit and loss clearly.

Answer rating: 100% (QA)

ANSWER a b Amount Of LossL area of 1234 L 10087 100 dollars ... View the full answer