The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist. This monopolist maximizes its profit by producing ________ units per day and charging a price of ________ per unit.
A)4; $6
B)8; $6
C)4; $18
D)8; $14

Question

The accompanying figure shows the demand curve, marginal revenue curve, marginal cost curve and average total cost curve for a monopolist.  This monopolist maximizes its profit by producing ________ units per day and charging a price of ________ per unit.
A)4; $6 
B)8; $6 
C)4; $18 
D)8; $14

Quizplus · Accepted Answer

The monopolist maximizes its profit by choosing the level of output at which marginal revenue equals marginal cost, or 4 units per day. From the demand curve, we can see that at this level of output, the monopolist should charge $18 per unit.

The Accompanying Figure Shows the Demand Curve, Marginal Revenue Curve