Figure 11-5
-Crown Theater is the only movie theater in the city.Its cost and revenue curves are shown in Figure 11-5.Monopolist Crown Theater would set the price of its tickets at

Question

Figure 11-5 
-Crown Theater is the only movie theater in the city.Its cost and revenue curves are shown in Figure 11-5.Monopolist Crown Theater would set the price of its tickets at

Quizplus · Accepted Answer

In a monopolistic market, the monopolist sets the price where marginal cost (MC) equals marginal revenue (MR) to maximize profit. The price is then determined by going up to the demand curve from this quantity. Without seeing Figure 11-5, this principle implies that the monopolist will choose a price higher than the marginal cost, which is typically not the lowest price option. Given the options, $7.50 is the highest price and likely reflects the monopolist's ability to set prices above marginal cost to maximize profits.

Figure 11-5 -Crown Theater Is the Only Movie Theater in the City.Its