Construct a graph illustrating the monopolist's profit-maximizing level of output and price. Use a straight-line demand curve, and show MR, MC, and ATC. And then from this graph, shade in the area that represents the monopolist's profit. Explain how to measure profit, and why this area shows profit.

***confused :( Thank youu:)

Question

Construct a graph illustrating the monopolist's profit-maximizing level of output and price. Use a straight-line demand curve, and show MR, MC, and ATC. And then from this graph, shade in the area that represents the monopolist's profit. Explain how to measure profit, and why this area shows profit.

***confused :( Thank youu:)

directrix · Answer

@iheartfood    Is there any data given for this problem?

anonymous · Answer

no :( all that is given i typed above! 

this is the subject line if it helps though: Determining profit-maximizing equilibrium for a hypothetical monopoly :/

anonymous · Answer

i think it's more like a hypothetical graph, just like a general outline :) but I'm not quite sure how to do this one :(

anonymous · Answer

@kropot72 do you understand this by any chance? 

preceding parts are as follow!

1) What rule does the monopolist follow when choosing the level of output that will maximize its profits? 
-inverse elasticity rule
2) How does a monopolist determine the price for its product at its profit-maximizing quantity of output?
-using the inverse elasticity rule equation. (P-MC)/P=1/PED solve for P
3) the one i posted:)