Reference: Ref 13-4 (Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by producing at output equal to:
A) Q1.
B) Q2.
C) Q3.
D) Q4.

Question

Reference: Ref 13-4 (Figure: Maximize Monopoly Profits) Refer to the figure. The monopolist will maximize its profit by producing at output equal to:
A) Q1. 
B) Q2. 
C) Q3. 
D) Q4.

Quizplus · Accepted Answer

The monopolist will maximize its profit by producing the quantity where marginal revenue (MR) equals marginal cost (MC). At quantity Q2, the MC curve intersects the MR curve, maximizing the monopolist's profit. Producing at any other quantity would result in lower profit levels.

Reference: Ref 13-4 (Figure: Maximize Monopoly Profits) Refer to the Figure