Exhibit 9-4 Demand and cost curves for a monopolist

-As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?
A) $60 per unit.
B) $90 per unit.
C) $120 per unit.
D) $150 per unit.

Question

Exhibit 9-4 Demand and cost curves for a monopolist
​ 
-As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?
A) $60 per unit. 
B) $90 per unit. 
C) $120 per unit. 
D) $150 per unit.

Quizplus · Accepted Answer

The monopolist will maximize profit where marginal revenue (MR) equals marginal cost (MC). In Exhibit 9-4, the MR curve is shown as a downward sloping line and the MC curve is shown as an upward sloping line. The point where they intersect is at a price of $120 per unit, which is the profit-maximizing price for the monopolist.

Exhibit 9-4 Demand and Cost Curves for a Monopolist