To maximize profit, the monopolist, whose cost and demand conditions are shown below, should charge a price of

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Quizplus · Accepted Answer

To maximize profit, a monopolist should set output where marginal revenue (MR) equals marginal cost (MC). From the table, at a price of $5, the quantity demanded is 8, and the monopolist's marginal revenue is also $5 (since it is a price maker, MR=P). At that output level, the marginal cost (MC) is also $5. Therefore, setting a price of $5 will maximize the monopolist's profits.

To Maximize Profit, the Monopolist, Whose Cost and Demand Conditions