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Figure: Demand, Revenue, and Cost Curves
-(Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government wanted to regulate Figglenuts-R-Us such that it would minimize the deadweight loss while allowing the firm to break even, it would impose a price ceiling of:
A) $40.
B) $46.
C) $50.
D) $65.

Question

Use the following to answer questions:
Figure: Demand, Revenue, and Cost Curves 
-(Figure: Demand, Revenue, and Cost Curves) Look at the figure Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government wanted to regulate Figglenuts-R-Us such that it would minimize the deadweight loss while allowing the firm to break even, it would impose a price ceiling of:
A) $40. 
B) $46. 
C) $50. 
D) $65.

Quizplus · Accepted Answer

To minimize deadweight loss while allowing the firm to break even, the price ceiling should be set where the demand curve intersects the average total cost curve, which is at $50.

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