Exhibit 9-8 Profit maximizing for a monopolist

-The profit-maximizing output for the monopolist in Exhibit 9-8 is:

Question

Exhibit 9-8 Profit maximizing for a monopolist
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-The profit-maximizing output for the monopolist in Exhibit 9-8 is:

Quizplus · Accepted Answer

The profit-maximizing output for a monopolist is where MR=MC. In this case, that is at point Q1 on the demand curve. The corresponding price is P1. Output at this point is OQ1. At this output level, the monopolist earns a profit equal to the shaded rectangle Q1UAEC. Any higher or lower output level will result in lower profits. Therefore, the correct answer is option C, which shows the profit-maximizing output level of OQ₂.

Exhibit 9-8 Profit Maximizing for a Monopolist