Monopoly Profit at Decreasing Cost

Discussion in 'Exams and Studying' started by monggoman, Sep 19, 2018.

  1. monggoman

    monggoman

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    Guys can you help me to understand this graph
     

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    monggoman, Sep 19, 2018
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  2. monggoman

    Becky Administrator

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    The vertical line shows the amounts of units sold, and the corresponding points on the Average Cost (AC) and Average Revenue (AR) show the cost (R) and revenue (Q) per unit. Therefore, the profits are equal to (P-S) x (Q-R), which is the shaded area.

    The description underneath the graph seems to refer to the graph below (not shown in that photo). Hope this helps!
     
    Becky, Sep 20, 2018
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