Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions.

-The profit-maximizing price for this firm is
A) $15.
B) $5.
C) $7.
D) $9.
E) $13.

Question

Refer to the accompanying table,which represents the costs and production for a monopolist,to answer the following questions.
 
-The profit-maximizing price for this firm is
A) $15. 
B) $5. 
C) $7. 
D) $9. 
E) $13.

Quizplus · Accepted Answer

To find the profit-maximizing price, the monopolist should set marginal revenue (MR) equal to marginal cost (MC). Looking at the table, we can see that at a price of $9, the monopolist would sell 4 units, resulting in a total revenue of $36 and a total cost of $32 (4 x $8). The resulting profit of $4 is the highest possible profit for this firm. At any other price, the monopolist would either sell fewer units (lowering revenue) or would have higher costs, resulting in lower profits. Therefore, the best choice is D) $9.

Refer to the Accompanying Table,which Represents the Costs and Production