Use Figure 8

question 82

Short Answer

Use Figure 8.2, which represents the situation faced by a monopolist, to answer questions a-c.

a. In Figure 8.2, indicate the profit maximizing price and output level and label them P1 and Q1.
b. Shade in the area that represents the firm's economic profit (or loss).
c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P2 and Q2.

---

Definitions:

Capital Account

A financial statement account that represents the ownership interests or equity in a company.

Closed

In accounting, this term refers to accounts that have been concluded for a period, typically at the end of an accounting cycle, by transferring their balances to permanent accounts.

Service Revenue

Income earned by a company from the services it provides to customers, as opposed to selling goods.

Equipment

Tangible assets used in operations, such as machinery and computers, that have a useful life beyond one year.