Figure 15-6

-Refer to Figure 15-6.In order to maximize profits,the monopolist should produce
A) 9 units.
B) 12 units.
C) 15 units.
D) more than 15 units.

Question

Figure 15-6
 
-Refer to Figure 15-6.In order to maximize profits,the monopolist should produce
A) 9 units. 
B) 12 units. 
C) 15 units. 
D) more than 15 units.

Quizplus · Accepted Answer

To maximize profits, the monopolist should produce where marginal revenue (MR) equals marginal cost (MC). In this scenario, MR is shown by the downward sloping demand curve and MC is shown by the upward sloping marginal cost curve. The point where they intersect is at 12 units of output, so the answer is option B. At any higher or lower level of output, the monopolist would earn less profit.

Figure 15-6 -Refer to Figure 15-6.In Order to Maximize Profits,the Monopolist Should