If a monopolist's price is $20 at 20 units of output and marginal revenue equals marginal cost and average total cost equals $15, then the firm's total profit is:

Question

BlackTom AI · Accepted Answer

We start by identifying the key quantities given: price P = 20, output Q = 20, average total cost ATC = 15, and the condition that marginal revenue equals marginal cost (MR = MC). From ATC and Q, total cost (TC) = ATC × Q = 15 × 20 = 300. From price and quantity, total revenue (TR) = P × Q = 20 × 20 = 400. Profit = TR − TC = 400 − 300 = 100.

Option a. $100: This matches the calculated profit 100, obtained from TR minus TC, given P = 20, Q = 20, and ATC = 15.

Option b. $400: This would be the total revenue, not profit. It ignores subtracting total cost, which is required to obtain profit. The error lies in conflating revenue with profit.

Option c. $5: This would reflect a small profit per unit or a mistaken calculation (for example, if someone mistakenly used a different cost figure or divided profit across units). It does not align with TR − TC = 400 − 300 = 100.

Option d. $300: This equals the total cost (TC) here, which would indicate zero profit (TR = TC). Since TR = 400 and TC = 300, profit is not zero but 100, so this option misstates the relationship between revenue and cost.

If a monopolist's price is $20 at 20 units of output and marginal revenue equals marginal cost and average total cost equals $15, then the firm's total profit is:

View Explanation

Log in for full answers

Similar Questions

Scenario 15-1A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.Refer to Scenario 15-1. At Q = 500, the firm's profit is

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

A monopoly’s profit can be calculated as:

What is the monopolist’s profit under the following conditions? The profit-maximising price charged for goods produced is $40. The intersection of the marginal-revenue and marginal cost-curves occurs where output is 20 units and marginal cost is $25. Average cost for 20 units of output is $15.

If a monopolist sells 200 units at $10 per unit and realises an average total cost of $6 per unit, what is the monopolist’s profit?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

If a monopolist's price is $20 at 20 units of output and marginal revenue equals marginal cost and average total cost equals $15, then the firm's total profit is:

View Explanation

Log in for full answers

Similar Questions

Scenario 15-1A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $40, its average revenue is $80, and its average total cost is $44.Refer to Scenario 15-1. At Q = 500, the firm's profit is

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.​Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.​Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.​Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

A monopoly’s profit can be calculated as:

What is the monopolist’s profit under the following conditions? The profit-maximising price charged for goods produced is $40. The intersection of the marginal-revenue and marginal cost-curves occurs where output is 20 units and marginal cost is $25. Average cost for 20 units of output is $15.

If a monopolist sells 200 units at $10 per unit and realises an average total cost of $6 per unit, what is the monopolist’s profit?

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?

Figure 16-5The following graph depicts the market situation for a monopoly pastry shop called Bearclaws.Refer to Figure 16-5.Given that Bearclaws chooses the profit-maximizing price and quantity, what profit level will it obtain?