question archive A monopoly firm maximizes its profit by producing 16,000 units of output
A monopoly firm maximizes its profit by producing 16,000 units of output
Subject:MarketingPrice:2.88 Bought3
A monopoly firm maximizes its profit by producing 16,000 units of output. At that level of output (Q = 16,000), its marginal revenue is $40, its average revenue is $60, its average total cost is $52, and its average variable cost is $38. For a profit-maximizing monopolist, which of the following statements is/are correct?
(x) The firm's profit-maximizing price is $40 and total revenue is $640,000.
(y) If the firm operates at the output amount where marginal cost is $40, then the firm's profit is $128,000.
(z) The firm will not shut down in the short run since price is more than average variable cost, but it will experience losses since price is less than average total cost.
A. (x), (y), and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only
