Table 10.5,which is data for a monopolist.

-Refer to Table 10.5 to answer this question.What would be the output and price if this firm was an unregulated,profit-maximizing firm?
A)4 and $52.
B)4 and $64.
C)5 and $60.
D)6 and $56.
E)9 and $44.

Question

Table 10.5,which is data for a monopolist.
 
-Refer to Table 10.5 to answer this question.What would be the output and price if this firm was an unregulated,profit-maximizing firm?
A)4 and $52. 
B)4 and $64. 
C)5 and $60. 
D)6 and $56. 
E)9 and $44.

Quizplus · Accepted Answer

To maximize profit, the monopolist chooses output where marginal revenue (MR) equals marginal cost (MC). In the table, MR can be calculated by dividing the change in total revenue by the change in quantity. For example, when output increases from 3 to 4, total revenue increases from $180 to $240, so MR = ($240 - $180)/(4 - 3) = $60. 
At an output of 4 units, MC = $52, which is less than MR. Therefore, the firm should produce 4 units and charge the corresponding price, which is $64, as shown in the table.

Table 10.5,which Is Data for a Monopolist