Table 11-6

-The demand and cost schedules of a monopolist are presented in Table 11-6.What price should a profit-maximizing monopolist charge?

Question

Table 11-6
 
-The demand and cost schedules of a monopolist are presented in Table 11-6.What price should a profit-maximizing monopolist charge?

Quizplus · Accepted Answer

A profit-maximizing monopolist will choose the quantity where marginal revenue (MR) equals marginal cost (MC). From the table, we can see that at a quantity of 5, MR=$13 and MC=$13. Therefore, the monopolist should charge a price of $13 to maximize profits. At any other quantity, the MR is either lower or higher than the MC, meaning that the monopolist would not be maximizing profits.

Table 11-6 -The Demand and Cost Schedules of a Monopolist Are Presented