Table 15-4
Consider the following demand and cost information for a monopoly.

-Refer to Table 15-4.To maximize profit,the monopolist sets price at
A) $10.
B) $15.
C) $20.
D) $25.

Question

Table 15-4
Consider the following demand and cost information for a monopoly.
 
-Refer to Table 15-4.To maximize profit,the monopolist sets price at
A) $10. 
B) $15. 
C) $20. 
D) $25.

Quizplus · Accepted Answer

To maximize profit, a monopolist sets MR = MC. From the table, when producing 6 units, MC is $15. At 6 units, MR is also $15. Therefore, the monopolist should set price at $20 (corresponding to quantity of 4 units), which is where MR = MC and produces the highest profit of $40.

Table 15-4 Consider the Following Demand and Cost Information for a Monopoly