b.

Monopoly
=

1. Supernormal Profit
 Profit earned by a firm when its Total Revenue (TR) is greater than Total Cost (TC) or
when Price (P) is greater than Average Total Cost (ATC).
 Profit maximizing level occurs when MR = MC, firm achieve the profit maximizing output
at 10 units.
 To find the profit maximizing price, use the same vertical line with output up to the
demand curve where profit maximizing price is RM200.
2. Normal Profit
 Achieved when Total Revenue (TR) is equal to Total Cost (TC) or when Price (P)
equals to Average Total Cost (ATC).
3. Subnormal Profit
 Losses incurred when Price (P) is lower than Average Total Cost (ATC) or when Total
Revenue (TR) is less than Total Cost (TC).
 At price RM150 firm suffer losses if price is below than ATC (P less than ATC)
 In this situation, firm suffers economic losses or subnormal profit shown in the
rectangle shaded area.
 At the equilibrium output of 10 units, firm suffer a loss of RM 500 as TR less than
TC.