Exhibit 9-21 In Exhibit 9-21, D = AR represents the market demand curve for bicycles, MR_m represents the marginal revenue curve for a monopolist producer of bicycles and S_c = MC = AC represents the marginal cost curve for a monopolist producer of bicycles and the market supply curve when the market is perfectly competitive.The market price in a competitive market would be

Question

Quizplus · Accepted Answer

The point where the market demand curve intersects the marginal cost curve is the socially optimal output level. In this case, it occurs at a quantity of 200 bicycles and a price of $20. This is the price that maximizes total welfare (consumer surplus and producer surplus). So, in a perfectly competitive market, the price would be $20.

Exhibit 9-21 in Exhibit 9-21, D = AR Represents