The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 24.3
What price will the profit-maximizing firm described in Table 24.3 charge, if the firm is earning a positive economic profit?
A)$1, 500
B)$1, 400
C)$1, 350
D)$1, 300
E)$1, 550

Question

The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 24.3
 What price will the profit-maximizing firm described in Table 24.3 charge, if the firm is earning a positive economic profit?
A)$1, 500 
B)$1, 400 
C)$1, 350 
D)$1, 300 
E)$1, 550

Quizplus · Accepted Answer

To maximize profit, a monopolist produces at the point where marginal revenue (MR) equals marginal cost (MC). Looking at the given table, we can see that the MC is lowest at a quantity of 11 units where it is $1,100. To find the corresponding price, we need to find the quantity demanded at that price. We can see from the table that at a price of $1,350, the quantity demanded is 9 units. So, the profit-maximizing price for the firm is $1,350.

The Table Given Below Shows the Prices Charged and Marginal