Figure 15-4

-Refer to Figure 15-4.A profit-maximizing monopoly will charge a price of
A) P5.
B) P4.
C) P3.
D) P2.

Question

Figure 15-4
 
-Refer to Figure 15-4.A profit-maximizing monopoly will charge a price of
A) P5. 
B) P4. 
C) P3. 
D) P2.

Quizplus · Accepted Answer

A profit-maximizing monopoly will produce at the quantity where marginal revenue equals marginal cost, which is Q2 in this graph. The corresponding price is P4, which is the highest price a monopoly can charge for this quantity. So, the monopoly will charge a price of P4.

Figure 15-4 -Refer to Figure 15-4.A Profit-Maximizing Monopoly Will Charge a Price