The following data refers to an unregulated monopolist:

-Refer to the above information to answer this question.What is the profit-maximizing price?
A)$0.
B)$30.
C)$35.
D)$50.
E)$140.

Question

The following data refers to an unregulated monopolist:
 
-Refer to the above information to answer this question.What is the profit-maximizing price?
A)$0. 
B)$30. 
C)$35. 
D)$50. 
E)$140.

Quizplus · Accepted Answer

The profit-maximizing price is where marginal revenue equals marginal cost. From the table, we can see that at a price of $35, the monopolist will sell 4 units and have a total revenue of $140 (4 x $35). At this level of output, the marginal cost is also $35, so the monopolist will earn a profit of $70 (total revenue - total cost). At any other price, the monopolist will either have a lower level of output and revenue, or higher costs, resulting in a lower profit. Therefore, the profit-maximizing price is $35.

The Following Data Refers to an Unregulated Monopolist