Figure 15-6

Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The profit-maximizing output and price for the monopolist are
A)output = 62; price = $24.
B)output = 62; price = $18.
C)output = 83; price = $22.
D)output = 104; price = $20.80.

Question

Figure 15-6
  
Figure 15-6 shows the cost and demand curves for a monopolist.
-Refer to Figure 15-6.The profit-maximizing output and price for the monopolist are
A)output = 62; price = $24. 
B)output = 62; price = $18. 
C)output = 83; price = $22. 
D)output = 104; price = $20.80.

Quizplus · Accepted Answer

The profit-maximizing output is where marginal revenue equals marginal cost. From the graph, we can see that this occurs at an output of 62 units. The profit-maximizing price is then found by adding the marginal cost to the marginal revenue at the profit-maximizing output. From the graph, we can see that the marginal cost at an output of 62 units is $18. Therefore, the profit-maximizing price is $18 + $6 = $24.

Figure 15-6 Figure 15-6 Shows the Cost and Demand Curves for a and Demand