Table 14-6
A monopolist faces the following demand curve:

-Refer to Table 14-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the profit-maximizing price?
A) $6
B) $9
C) $12
D) $15

Question

Table 14-6
A monopolist faces the following demand curve:
 
-Refer to Table 14-6.Suppose the monopolist has total fixed costs equal to $5 and a variable cost equal to $4 per unit for all units produced.What is the profit-maximizing price?
A) $6 
B) $9 
C) $12 
D) $15

Quizplus · Accepted Answer

To find the profit-maximizing price, the monopolist should produce where marginal revenue equals marginal cost. From the table, we can see that at a price of $12, the monopolist can sell 4 units, with a marginal revenue of $4. At a production of 4 units, the monopolist's marginal cost is $4. Therefore, the profit-maximizing price is $12.

Table 14-6 A Monopolist Faces the Following Demand Curve