Exhibit 9-14
-The production level that will maximize the profit (or minimize loss) for the monopoly in Exhibit 9-14 is
A) 0
B) 22
C) 17
D) 12
E) more than 22

Question

Exhibit 9-14 
-The production level that will maximize the profit (or minimize loss) for the monopoly in Exhibit 9-14 is
A) 0 
B) 22 
C) 17 
D) 12 
E) more than 22

Quizplus · Accepted Answer

The production level that will maximize profit (or minimize loss) for a monopoly is where marginal revenue equals marginal cost. In Exhibit 9-14, the marginal revenue curve is represented by the linear function starting at a price of $45 and decreasing by $1 for every additional unit produced. The marginal cost curve is represented by the linear function starting at $10 and increasing by $1 for every additional unit produced. The point where these two lines intersect is at a quantity of 17. Therefore, the production level that will maximize profit (or minimize loss) for the monopoly in Exhibit 9-14 is 17.

Exhibit 9-14 -The Production Level That Will Maximize the Profit (Or Minimize