Figure 15-9

Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.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 15-9
  
Figure 15-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 15-9.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). The monopoly's price is typically higher than the marginal cost, and the difference is often referred to as the monopoly markup. In this case, the difference is $21.

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