Use the following to answer questions:
-(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. How many hats should the Saints produce, and what price should the organization charge to maximize its profits?
A) 1; $28
B) 2; $26
C) 3; $24
D) 4; $22

Question

Use the following to answer questions: 
-(Table: Prices and Demand) Look at the table Prices and Demand. The New Orleans Saints have a monopoly on Saints logo hats. The marginal cost of producing a hat is $18. How many hats should the Saints produce, and what price should the organization charge to maximize its profits?
A) 1; $28 
B) 2; $26 
C) 3; $24 
D) 4; $22

Quizplus · Accepted Answer

To maximize profits, the Saints should produce where marginal cost equals marginal revenue. If the marginal cost is $18, they should produce 3 hats and charge $24, as this is where the marginal revenue equals the marginal cost.

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