A monopoly is a one-firm industry that produces a product with no close substitutes and with substantial barriers to entry. There are other firms in the industry and there are substitutes for Microsoft's productsPrice discrimination occurs when a firm charges different consumer groups different prices for the same product. EX. Movie theatre giving a student discountDeadweight loss is composed of consumer surplus and producer surplus that is lost from producing less than the efficient output.
Suppose that a monopolist is selling 100 units of a product at a price of $20 each. If the average variable cost at this level of output is $10.50 and average fixed cost at this level of output is $8, how much total economic profit is the firm earning?
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