Figure: Maximize Monopoly Profits Reference: Ref 13-4 (Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by charging a price equal to:
A) P1.
B) P2.
C) P3.
D) P4.

Question

Figure: Maximize Monopoly Profits  Reference: Ref 13-4 (Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by charging a price equal to:
A) P1. 
B) P2. 
C) P3. 
D) P4.

Quizplus · Accepted Answer

The monopolist will maximize its profit where marginal revenue (MR) equals marginal cost (MC) at point Q2. At this point, the corresponding price is P2. Therefore, the best choice is B.