The Following Figures Show the Demand and Cost Curves of a Perfectly

question 60

Multiple Choice

The following figures show the demand and cost curves of a perfectly competitive and a monopoly firm respectively. Figure 24.7 D: Average Revenue
AC: Average cost
MC: Marginal cost
MR: Marginal cost
According to Figure 24.7, when the monopolist is maximizing profit:

• A)its resources are not being used efficiently.
• B)its price is higher than that charged by the perfectly competitive firm.
• C)its price is equal to the price charged by the perfectly competitive firm.
• D)it is earning above-normal profit.
• E)it is actually incurring a loss.

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Definitions:

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