Business: Suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist? a. The monopolist is currently maximizing profits, and its total profits are $200. b. The monopolist is currently maximizing profits, and its total profits are $250. c. The monopolist is not currently maximizing its profits; it should produce more units and charge

Your answer is C. I just took the test. Passed with 100%...

Suppose when a monopolist produces 50 units its

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30.01.2022

b. The monopolist is currently maximizing profits, and its total profits are $250

Explanation:

The computation of monopolist is shown below:-

The monopolist is producing 50 units ate which are

MR = $4

Price = $8

MC = $4

ATC = $3

This applies that

MR = MC

while

P > ATC

So the monopolist is making a profit by making profit-maximizing quantity.

Total profits are (P - ATC) × Q

= (8 - 3) × 50

= $250

Hence, b option is correct

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