Reference: Ref 14-1 (Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets- Market A and Market B-if the monopolist were to charge a uniform price PU between the two markets, that price would fall in what range?
A) $5

Question

Reference: Ref 14-1 (Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets- Market A and Market B-if the monopolist were to charge a uniform price PU between the two markets, that price would fall in what range?
A) $5 < PU < $9 
B) $5 < PU < $10 
C) $9 < PU < $10 
D) $7 < PU < $10

Quizplus · Accepted Answer

If the monopolist charges a uniform price PU, they will produce at the output level where MR=MC, which is at point E. Therefore, to determine the price, draw a horizontal line from point E to the demand curves for Market A and Market B. The price will be the point where this line intersects the demand curves, which is in the range of $9 < PU < $10.

Reference: Ref 14-1 (Figure: Monopolist) Refer to the Figure