Refer to the information provided in Table 13.2 below to answer the question(s) that follow.
Table 13.2
$$\begin{array} { | c | c | }
\hline \text { Price (\$) } & \text { Quantity } \
\hline 10.00 & 1 \
\hline 9.00 & 2 \
\hline 8.00 & 3 \
\hline 7.00 & 4 \
\hline 6.00 & 5 \
\hline 5.00 & 6 \
\hline 4.00 & 7 \
\hline
\end{array}$$
-Refer to Table 13.2. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $2 per unit of providing the product, then the monopoly maximizes its profits by charging ________ per unit and selling ________ units of output.
A) $6; 5
B) $7; 4
C) $5; 6
D) $8; 3

Question

Refer to the information provided in Table 13.2 below to answer the question(s) that follow.
Table 13.2
 $$\begin{array} { | c | c | } 
\hline \text { Price (\$) } & \text { Quantity } \
\hline 10.00 & 1 \
\hline 9.00 & 2 \
\hline 8.00 & 3 \
\hline 7.00 & 4 \
\hline 6.00 & 5 \
\hline 5.00 & 6 \
\hline 4.00 & 7 \
\hline
\end{array}$$
-Refer to Table 13.2. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $2 per unit of providing the product, then the monopoly maximizes its profits by charging ________ per unit and selling ________ units of output.
A) $6; 5
B) $7; 4
C) $5; 6
D) $8; 3

Quizplus · Accepted Answer

The monopoly maximizes profit where marginal revenue equals marginal cost. Here, the marginal cost is constant at $2. The monopoly will choose the price and quantity where the difference between total revenue and total cost is greatest. At a price of $6, selling 5 units, the total revenue is $30, and the total cost is $10, resulting in the highest profit of $20.

Refer to the Information Provided in Table 13 -Refer to Table 13