Table 11-4

-The demand and total cost schedules of a monopolist are presented in Table 11-4.What price should a profit-maximizing monopolist charge?

Question

Table 11-4
 
-The demand and total cost schedules of a monopolist are presented in Table 11-4.What price should a profit-maximizing monopolist charge?

Quizplus · Accepted Answer

The profit-maximizing monopolist will charge the price that maximizes total revenue. Total revenue is equal to price times quantity. The quantity demanded at a price of $24 is 100 units. The total revenue at a price of $24 is $2,400. The quantity demanded at a price of $23 is 120 units. The total revenue at a price of $23 is $2,760. The quantity demanded at a price of $22 is 140 units. The total revenue at a price of $22 is $3,080. The quantity demanded at a price of $21 is 160 units. The total revenue at a price of $21 is $3,360. Therefore, the profit-maximizing monopolist will charge a price of $24.

Table 11-4 -The Demand and Total Cost Schedules of a Monopolist Are