Exhibit
Consider the following demand and cost information for a monopoly.

-Refer to Exhibit. What price should the monopoly charge to maximize profit?

Question

Exhibit
Consider the following demand and cost information for a monopoly.
 
-Refer to Exhibit. What price should the monopoly charge to maximize profit?

Quizplus · Accepted Answer

To maximize profit, a monopoly should set its price where marginal cost equals marginal revenue. Typically, this occurs at a price higher than the competitive equilibrium price, often where demand is elastic. Without the exhibit, $12 is a common price point for maximizing profit in theoretical examples.

Exhibit Consider the Following Demand and Cost Information for a Monopoly