Figure 10-9
Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.What is the economically efficient output level?
A) 600 units
B) 800 units
C) 940 units
D) 1160 units

Question

Figure 10-9
  Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.What is the economically efficient output level?
A) 600 units 
B) 800 units 
C) 940 units 
D) 1160 units

Quizplus · Accepted Answer

The economically efficient output level occurs where marginal cost (MC) equals marginal revenue (MR). In Figure 10-9, this occurs at an output level of 940 units, which is also the point where the demand and MC curves intersect. Any other output level would result in the monopolist producing either too little or too much, leading to allocative inefficiency. Therefore, the best choice is to produce 940 units.

Figure 10-9 Figure 10-9 Shows the Demand and Cost Curves