Final answer:
A monopolist determines its profit-maximizing level of output by setting the quantity where marginal revenue equals marginal cost. Total revenue, total cost, and total profit can then be determined at this output. In a competitive market, output quantity would be determined by the intersection of supply and demand, with zero profit. A monopolist faces a downward sloping demand curve because it is the only seller and can influence market price.
Step-by-step explanation:
A monopolist determines its profit-maximizing level of output by setting the quantity where marginal revenue equals marginal cost. This occurs at the last possible point before marginal costs start exceeding marginal revenue. In this case, the profit-maximizing output is 5.
Total revenue can be calculated by multiplying the price at the profit-maximizing output by the quantity. Total cost can be determined by adding up all the costs incurred by the monopolist in producing the profit-maximizing output. Total profit is calculated by subtracting total cost from total revenue.
In a competitive market, the output quantity would be determined by the intersection of the market's supply and demand curves. The profit in a competitive market would be zero in the long run because there is free entry and exit of firms, driving prices down to the point where each firm earns zero profit.
A monopolist faces a downward-sloping demand curve because it is the only seller in the market, and it can influence the market price. To sell more output, a monopolist must lower its price, which leads to a decline in marginal revenue. Each additional unit sold by the monopolist brings down the market price and applies it to an increasing number of units.