The following graph gives cost and revenue data for a monopolist:

-Refer to the above graph to answer this question.If the monopolist is regulated and forced to charge the socially optimum price,what will be its price and output?
A)$10 and 70.
B)$25 and 110.
C)$30 and 100.
D)$45 and 70.
E)$60 and 40.

Question

The following graph gives cost and revenue data for a monopolist:
 
-Refer to the above graph to answer this question.If the monopolist is regulated and forced to charge the socially optimum price,what will be its price and output?
A)$10 and 70. 
B)$25 and 110. 
C)$30 and 100. 
D)$45 and 70. 
E)$60 and 40.

Quizplus · Accepted Answer

The socially optimum price and output occur where the marginal cost curve intersects the demand curve, which corresponds to choice B, $25 and 110 units. This point ensures allocative efficiency by equating the price to the marginal cost.

The Following Graph Gives Cost and Revenue Data for a Monopolist