The Figure Given Below Represents a Monopoly Firm Producing Perfume

question 32

Multiple Choice

The figure given below represents a monopoly firm producing perfume with downward sloping demand and marginal revenue (MR) curves.The products of this firm are sold in the competitive market by a retailer.Among the horizontal lines in the figure:
A - represents the marginal cost of per unit perfume production
B - represents the marginal cost of an independent perfume retailer
C - represents the sum of A and B
D - represents the marginal cost of the perfume monopolist for retailing its own output
E - represents the sum of A and D.


-Refer to Figure .Determine the profit earned by the perfume monopolist if it chooses to hire a retailer for selling its product.

• A)$2.7
• B)$6.5
• C)$5.5
• D)$2.4

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