Figure 15-7
-Refer to Figure 15-7. In order to maximize profits, the monopolist should produce
A)9 units.
B)12 units.
C)15 units.
D)more than 15 units.

Question

Figure 15-7 
-Refer to Figure 15-7. In order to maximize profits, the monopolist should produce
A)9 units. 
B)12 units. 
C)15 units. 
D)more than 15 units.

Quizplus · Accepted Answer

The monopolist should produce at the level where marginal revenue (MR) is equal to marginal cost (MC). In this case, MR intersects MC at the quantity of 12 units. At this quantity, the monopolist can charge a price of $7 and earn a total profit of $36 ($84 revenue - $48 cost). Producing any fewer units would result in lost revenue, while producing any more units would result in higher costs outweighing the increased revenue. Therefore, the best choice is to produce 12 units.

Figure 15-7 -Refer to Figure 15-7. in Order to Maximize Profits, the Maximize