Figure 5.2 Cost and Demand Conditions of a Monopolist

-Refer to Figure 5.2. The profit-maximizing level of output for the monopoly is
A) zero units-the firm should shut down
B) 40 units
C) 45 units
D) 65 units

Question

Figure 5.2 Cost and Demand Conditions of a Monopolist
 
-Refer to Figure 5.2. The profit-maximizing level of output for the monopoly is
A) zero units-the firm should shut down 
B) 40 units 
C) 45 units 
D) 65 units

Quizplus · Accepted Answer

The profit-maximizing level of output for a monopoly is where marginal cost (MC) equals marginal revenue (MR). Without the figure, we assume that 45 units is where this condition is met.

Figure 52 Cost and Demand Conditions of a Monopolist