Figure 10-9
Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.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 10-9
  Figure 10-9 shows the demand and cost curves for a monopolist.
-Refer to Figure 10-9.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 monopolist produces where MC=MR, at a quantity of 30, and sets a price of $21. The perfectly competitive industry produces where P=MC, at a quantity of 60, and sets a price of $7. The difference between the monopoly's price and the perfectly competitive industry's price is $21-$7=$14. Therefore, the correct answer is B, which is the closest option to $14.

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