Figure 13.5

Figure 13.5 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.5.At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?
A)$8
B)$11.50
C)$21
D)There is no difference.

Question

Figure 13.5
  
Figure 13.5 shows the demand and cost curves for a monopolist.
-Refer to Figure 13.5.At the profit-maximizing quantity, what is the difference between the monopoly's price and the marginal cost of production?
A)$8 
B)$11.50 
C)$21 
D)There is no difference.

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing quantity is where marginal cost (MC) equals marginal revenue (MR), but the price is set higher on the demand curve. The difference between the monopoly's price and the marginal cost is the markup, which is $21 in this case.

Figure 13.5 Figure 13.5 Shows the Demand and Cost Curves for a and Cost