The graph below depicts a firm with market power. In the graph, MC represents the firm’s marginal costs, ATC represents the average total costs, D
The graph below depicts a firm with market power. In the graph, MC represents the firm’s marginal costs, ATC represents the average total costs, D represents demand, and MR represents marginal revenue.
MC
110
ATC
Price ($)
40
50
60
70
80
95
Quantity/Units
MR
a. will this profit-maximizing monopolist charge?
b. How many units will it produce?
c. would be the socially optimal output quantity?
d. Calculate the consumer surplus at the profit-maximizing price and output.
e. Is this a natural monopoly? Explain. with economics
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