The following are demand and cost data for a monopolist:

$\begin{array} { | c | c | c | c | }
\hline &{ \text { Demand Data } } & { \text { Cost Data } } \
\hline \text { Price } & \text { Quantity Demanded } & \text { Output } & \text { Total Cost } \
\hline \$ 5.50 & 3 & 3 & \$ 5.00 \
\hline 5.00 & 4 & 4 & 6.00 \
\hline 4.50 & 5 & 5 & 6.50 \
\hline 3.85 & 6 & 6 & 7.50 \
\hline 3.35 & 7 & 7 & 9.00 \
\hline 2.90 & 8 & 8 & 11.00 \
\hline 2.50 & 9 & 9 & 14.00 \
\hline
\end{array}$
-Equilibrium price for the monopolist will be:
A)$5.00
B)$2.90
C)$3.35
D)$4.50
E)$3.85

Question

The following are demand and cost data for a monopolist:

$\begin{array} { | c | c | c | c | } 
\hline  &{ \text { Demand Data } }  & { \text { Cost Data } } \
\hline \text { Price } & \text { Quantity Demanded } & \text { Output } & \text { Total Cost } \
\hline \$ 5.50 & 3 & 3 & \$ 5.00 \
\hline 5.00 & 4 & 4 & 6.00 \
\hline 4.50 & 5 & 5 & 6.50 \
\hline 3.85 & 6 & 6 & 7.50 \
\hline 3.35 & 7 & 7 & 9.00 \
\hline 2.90 & 8 & 8 & 11.00 \
\hline 2.50 & 9 & 9 & 14.00 \
\hline
\end{array}$
-Equilibrium price for the monopolist will be:
A)$5.00
B)$2.90
C)$3.35
D)$4.50
E)$3.85

Quizplus · Accepted Answer

To find the equilibrium price for a monopolist, we need to determine where marginal revenue (MR) equals marginal cost (MC). First, calculate the marginal revenue by finding the change in total revenue (Price * Quantity) for each quantity, then calculate the marginal cost by finding the change in total cost for each quantity. The equilibrium is where MR = MC. Given the data, the equilibrium occurs at a price of $4.50, which corresponds to a quantity of 5, where the changes in revenue and costs align most closely to the principle of MR = MC.

The Following Are Demand and Cost Data for a Monopolist