-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the price per pillow is
A) $70.
B) $60.
C) $40.
D) $100.
E) $30.

Question

-The figure above shows the demand,marginal revenue,and marginal cost curves for Paul's Parrot Pillows,a single-price monopoly producer of pillows stuffed with parrot feathers.When Paul maximizes his profit,the price per pillow is
A) $70. 
B) $60. 
C) $40. 
D) $100. 
E) $30.

Quizplus · Accepted Answer

A monopoly maximizes profit where marginal revenue (MR) equals marginal cost (MC). The price is then determined from the demand curve at that quantity, which is higher than the MR=MC point. Without the figure, the standard economic principle is that the price will be above the MC and MR intersection, not directly given by these curves. However, given the options and typical monopoly behavior, the highest price that could be associated with profit maximization is chosen, assuming the figure supports this.

-The Figure Above Shows the Demand,marginal Revenue,and Marginal Cost Curves