In Figure 24.2,a profit-maximizing monopolist will charge a price of
A)$6.40.
B)$4.70.
C)$4.00.
D)$5.50.

Question

In Figure 24.2,a profit-maximizing monopolist will charge a price of
A)$6.40. 
B)$4.70. 
C)$4.00. 
D)$5.50.

Quizplus · Accepted Answer

The monopolist will choose the quantity at which marginal revenue equals marginal cost, which in this case is where the MC (marginal cost) curve intersects with the MR (marginal revenue) curve. At this point, the monopolist will charge the highest price possible for that quantity. The intersection point occurs at a quantity of 8 and a price of $5.50, so the monopolist will charge that price.