Table 14-12
The following table provides information on the price,quantity,and average total cost for a monopoly.

-Refer to Table 14-12.In order to maximize profits,the firm should produce
A) 4 units of output.
B) 8 units of output.
C) 12 units of output.
D) 16 units of output.

Question

Table 14-12
The following table provides information on the price,quantity,and average total cost for a monopoly.
 
-Refer to Table 14-12.In order to maximize profits,the firm should produce
A) 4 units of output. 
B) 8 units of output. 
C) 12 units of output. 
D) 16 units of output.

Quizplus · Accepted Answer

To maximize profits, a monopolist should produce at the quantity where marginal revenue equals marginal cost, which is the level of output where the slope of the total revenue curve equals the slope of the total cost curve. In this case, the marginal cost curve intersecting with the marginal revenue curve at 8 units of output, which is the level where the monopolist should produce to maximize profits. At this level of output, the price will be $50, the quantity sold will be 8 units, and the average total cost will be $42.50, resulting in a profit of ($50 - $42.50) x 8 = $60.

Table 14-12 The Following Table Provides Information on the Price,quantity,and Average Total