Table 14-3
Consider the following demand and cost information for a monopoly.

-Refer to Table 14-3.To maximize profit,the monopolist sets price at
A) $10.
B) $15.
C) $20.
D) $25.

Question

Table 14-3
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 14-3.To maximize profit,the monopolist sets price at
A) $10. 
B) $15. 
C) $20. 
D) $25.

Quizplus · Accepted Answer

To maximize profit, the monopolist should produce where marginal revenue equals marginal cost (MR=MC). In the table, we can see that at an output of 6, MR=MC=$20. Therefore, the monopolist should set price at $20 to maximize profit. Selling at any other price point will lead to lower profits for the monopolist.

Table 14-3 Consider the Following Demand and Cost Information for a Monopoly