Answer:
B) $6 per unit, and the monopolist earns economic profits of $3,000 per month
Explanation:
The monopolistic market maximize their profit at the point on which marginal cost = marginal revenue.
If this is the maximizing profit point, and marginal cost is 6, then marginal revenue will be $6
The profit will be the difference between total revenue and total cost:
consumers pay up to 8 per units and the output is 1,000 units
8 x 1,000 = 8,000 total revenue
Then, average cost is $5 so we multiply this by the unit output to calculate the total cost.
5 x 1,000 = 5,000 total cost
last step, revenue - total cost
8,000 - 5,000 = 3,000
