Figure 15-9

Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the difference between the monopoly's price and perfectly competitive industry's price?
A)The monopoly's price is higher by $9.50.
B)The monopoly's price is higher by $13.
C)The monopoly's price is higher by $3.50.
D)The monopoly's price is higher by $21.

Question

Figure 15-9
  
Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.What is the difference between the monopoly's price and perfectly competitive industry's price?
A)The monopoly's price is higher by $9.50. 
B)The monopoly's price is higher by $13. 
C)The monopoly's price is higher by $3.50. 
D)The monopoly's price is higher by $21.

Quizplus · Accepted Answer

The monopoly's price is where the MR and MC curves intersect, which is at around $18.50. The perfectly competitive industry's price is where the industry's supply curve intersects with the demand curve, which is at around $5.50. Therefore, the difference between the monopoly's price and perfectly competitive industry's price is $18.50 - $5.50 = $13. Choice B is the correct answer.

Figure 15-9 Figure 15-9 Shows the Demand and Cost Curves for a and Cost