FIGURE 10- 4 Suppose a monopolist faces the demand curve and cost curves shown below.

-Refer to Figure 10- 4.In order to maximize its profits,a perfect- price- discriminating monopolist produces the quantity

Question

FIGURE 10- 4 Suppose a monopolist faces the demand curve and cost curves shown below.
 
-Refer to Figure 10- 4.In order to maximize its profits,a perfect- price- discriminating monopolist produces the quantity

Quizplus · Accepted Answer

A perfect price-discriminating monopolist produces where marginal revenue equals marginal cost. In this case, MR = MC at quantity Q2. At this quantity, the monopolist can charge each customer their willingness to pay, maximizing profits. Therefore, the best choice is Q2.

FIGURE 10- 4 Suppose a Monopolist Faces the Demand Curve