The table given below shows the prices charged and marginal cost incurred by a monopolist for different units of the output. Table 10.3

- What price will the profit-maximizing firm described in Table 10.3 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 10.3

- What price will the profit-maximizing firm described in Table 10.3 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

A profit-maximizing monopolist will produce at the output level where MR=MC and then charge the corresponding price to earn economic profit. In this case, the output level where MR=MC is 4 units, and the corresponding price is $1,350 (given in the table as the price for the 4th unit). Any output level beyond that would result in higher marginal cost than marginal revenue, leading to a decrease in profit. Therefore, the answer is C) $1,350.

The Table Given Below Shows the Prices Charged and Marginal