Figure 15-9

Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the economically efficient output level?

Question

Figure 15-9
  
Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the economically efficient output level?

Quizplus · Accepted Answer

The economically efficient output level is achieved when marginal cost equals marginal revenue, which occurs at the output level where the demand curve intersects the marginal cost curve. In Figure 15-9, this occurs at an output level of 940 units.

To maximize profits, the monopolist should produce at the output level where marginal cost equals marginal revenue, which is also the economically efficient output level. Therefore, the best choice is to produce 940 units.

Figure 15-9 Figure 15-9 Shows the Demand and Cost Curves for a and Cost