-The figure above shows the demand, marginal revenue and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximises his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.
A) $60; $60
B) $60; $40
C) $70; $60
D) $100; $40
E) $70; $40

Question

-The figure above shows the demand, marginal revenue and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximises his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.
A) $60; $60 
B) $60; $40 
C) $70; $60 
D) $100; $40 
E) $70; $40

Quizplus · Accepted Answer

In a monopoly, profit maximization occurs where marginal revenue equals marginal cost. The price is determined by the demand curve at this quantity. Here, the marginal cost is $40, and the price on the demand curve at this quantity is $70.

-The Figure Above Shows the Demand, Marginal Revenue and Marginal