Practicing Success
Practicing Success
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| Suppose there is a village located far-away. There is only one well in the village and villagers are dependent on this well for fulfillment of their water requirements. This well is owned by an individual and villagers will have to purchase the water from him. In order to purchase the water, the customer will have to withdraw the water by themselves from the well. |
| When will the maximum profit be earned by the owner? |
Equal to total costs Equal to minimum of total revenue Equal to maximum of Marginal Revenue Equal to maximum of total revenue |
| Equal to maximum of total revenue |
| The profit is equal to total revenue minus the total costs. Since the monopolist’s costs are zero, the profit will be maximum where total revenue is maximum. |
