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JAMB Economics 1995 Question 23

Question 23

Market Structures

In the diagram above, the total revenue of the monopolist is given by the area

Diagram for this question
  1. A.OQ1MP4
  2. B.P4MTP1
  3. C.OQ1TP1
  4. D.OQ2SP2.
Show the answer and explanation

Answer: C (OQ1TP1)

Explanation

The monopolist produces Q1, where MR = MC (point M), and charges the price read off the demand curve at T, which is P1. Total revenue = price × quantity = area OQ1TP1.