The following table gives the cost and demand data for a particular market.

-Refer to the above information to answer this question.Suppose that the data describes a monopoly industry.What will be the monopoly price and output?
A)$11.5 and 4.
B)$10 and 5.
C)$8.5 and 6.
D)$7 and 7.
E)$5.5 and 8.

Question

The following table gives the cost and demand data for a particular market.
 
-Refer to the above information to answer this question.Suppose that the data describes a monopoly industry.What will be the monopoly price and output?
A)$11.5 and 4. 
B)$10 and 5. 
C)$8.5 and 6. 
D)$7 and 7. 
E)$5.5 and 8.

Quizplus · Accepted Answer

The monopoly price is $11.5 and the monopoly output is 4. This is because a monopoly is a market structure in which there is only one seller of a good or service. As a result, the monopoly has the power to set the price of the good or service. The monopoly will set the price at the point where marginal revenue equals marginal cost. In this case, the marginal revenue is $11.5 and the marginal cost is $7. Therefore, the monopoly will set the price at $11.5. The monopoly will then produce the quantity of output at which marginal cost equals marginal revenue. In this case, the marginal cost is $7 and the marginal revenue is $11.5. Therefore, the monopoly will produce 4 units of output.

The Following Table Gives the Cost and Demand Data for a Particular