(Table: Prices and Demand for New York Rangers Signature Jerseys) Use Table: Prices and Demand for New York Rangers Signature Jerseys. The New York Rangers have a monopoly on Rangers jerseys. The marginal cost of producing a jersey is $18. The Rangers should produce _____ jerseys and charge _____ to maximize its profits.
A)1; $28
B)2; $26
C)3; $24
D)4; $22

Question

(Table: Prices and Demand for New York Rangers Signature Jerseys) Use Table: Prices and Demand for New York Rangers Signature Jerseys. The New York Rangers have a monopoly on Rangers jerseys. The marginal cost of producing a jersey is $18. The Rangers should produce _____ jerseys and charge _____ to maximize its profits. 
A)1; $28 
B)2; $26 
C)3; $24 
D)4; $22

Quizplus · Accepted Answer

To maximize profits, the Rangers should produce where marginal revenue equals marginal cost (MR=MC). Looking at the table, we can see that at a price of $24, the quantity demanded is 3, which is the point where MR=MC. At a higher price, the quantity demanded decreases, and at a lower price, the quantity demanded increases, but the marginal cost is always constant at $18. Therefore, producing and selling 3 jerseys at a price of $24 will maximize the Rangers' profits.