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. If the Saints were a perfectly competitive firm in a perfectly competitive industry, their profit-maximizing price and output, respectively, would be:
A) $24 and 3.
B) $30 and 0.
C) $18 and 6.
D) $8 and 6.

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. If the Saints were a perfectly competitive firm in a perfectly competitive industry, their profit-maximizing price and output, respectively, would be:
A) $24 and 3. 
B) $30 and 0. 
C) $18 and 6. 
D) $8 and 6.

Quizplus · Accepted Answer

In perfect competition, firms produce where price equals marginal cost. Here, the marginal cost is $18, so the price would be $18. The output would be where the demand at this price is met, which is 6 hats.

Use the Following to Answer Questions