The following table shows the total revenue and total cost for a monopolist at various levels of output.
Table 11-2 $$\begin{array} { | c | c | c | }
\hline \text { Output } & \text { Total Revenue } & \text { Total Cost } \
\hline 1 & 12 & 22 \
\hline 2 & 26 & 26 \
\hline 3 & 50 & 32 \
\hline 4 & 58 & 40 \
\hline 5 & 60 & 51 \
\hline 6 & 61 & 66 \
\hline 7 & 58 & 86 \
\hline 8 & 48 & 112 \
\hline 9 & 36 & 142 \
\hline
\end{array}$$
-What is the profit-maximizing level of output for the monopolist in Table 11-2?
A)3
B)4
C)5
D)1

Question

The following table shows the total revenue and total cost for a monopolist at various levels of output.
Table 11-2 $$\begin{array} { | c | c | c | } 
\hline \text { Output } & \text { Total Revenue } & \text { Total Cost } \
\hline 1 & 12 & 22 \
\hline 2 & 26 & 26 \
\hline 3 & 50 & 32 \
\hline 4 & 58 & 40 \
\hline 5 & 60 & 51 \
\hline 6 & 61 & 66 \
\hline 7 & 58 & 86 \
\hline 8 & 48 & 112 \
\hline 9 & 36 & 142 \
\hline
\end{array}$$
-What is the profit-maximizing level of output for the monopolist in Table 11-2?
A)3
B)4
C)5
D)1

Quizplus · Accepted Answer

To find the profit-maximizing level of output, we need to find the point where revenue equals cost. This is where the monopolist earns the highest possible profit. Looking at the table, we can see that at output level 4, total revenue is $58 and total cost is also $58, indicating that the monopolist can earn the highest profit at this level of output. At output levels 3 and 5, the difference between total revenue and total cost is lower than it is at output level 4, meaning that the monopolist will earn less profit at those levels. Therefore, the best choice is B, output level 4.

The Following Table Shows the Total Revenue and Total Cost