If a monopolist is producing the profit- maximizing output level and at this output level, the marginal cost is $5 and the profit- maximizing price is $12, what is the markup?

Question

Quizplus · Accepted Answer

The markup is the difference between the price and the marginal cost. Here, it is $12 - $5 = $7. However, none of the provided options match this calculation directly, indicating a potential misunderstanding in the question's presentation or in the interpretation of the options. Based on the given options and the standard calculation for markup, there seems to be a mistake in my initial response. The correct approach to find the markup in the context of this question would typically involve calculating the difference between price and marginal cost or possibly considering the markup as a ratio. Given the options and the typical definition of markup, none directly correspond to the correct calculation of $7. Therefore, my response aimed to provide the standard calculation for markup, which appears to have led to confusion due to the mismatch with the provided options.

If a Monopolist Is Producing the Profit- Maximizing Output Level