The figure given below represents two monopolists James and Jerry.James produces Good A using the input Good B which is produced by Jerry and has no other variable costs.James is the only consumer of Good B, and the marginal cost incurred by Jerry to produce Good B is zero.DA and DB represent the demand curves for Good A and Good B respectively.MRA and MRB represent the marginal revenue received from Good A and Good B respectively.It takes one unit of A to produce a unit of B.

-Refer to Figure.What would be Jerry's profit maximizing price-output combination if the two monopolists do not cooperate?
A)4 units at $9 each
B)4 units at $3 each
C)4 units at $6 each
D)8 units at $6 each

Question

The figure given below represents two monopolists James and Jerry.James produces Good A using the input Good B which is produced by Jerry and has no other variable costs.James is the only consumer of Good B, and the marginal cost incurred by Jerry to produce Good B is zero.DA and DB represent the demand curves for Good A and Good B respectively.MRA and MRB represent the marginal revenue received from Good A and Good B respectively.It takes one unit of A to produce a unit of B.

-Refer to Figure.What would be Jerry's profit maximizing price-output combination if the two monopolists do not cooperate?

-Refer to Figure.What would be Jerry's profit maximizing price-output combination if the two monopolists do not cooperate?
A)4 units at $9 each 
B)4 units at $3 each 
C)4 units at $6 each 
D)8 units at $6 each

Quizplus · Accepted Answer

Jerry's profit-maximizing price-output combination, without cooperation from another monopolist, would typically be determined by where marginal cost (MC) equals marginal revenue (MR). Without the specific figure, we can't calculate exact values, but given standard economic theory, a monopolist aims to maximize profit by producing at a level where MC=MR and then charging the highest price the market will bear for that quantity. Choice C suggests a moderate price and quantity combination that might reflect this principle, assuming the absence of cooperation doesn't lead to a price war or other competitive behaviors that could drive the price down to marginal cost.

The Figure Given Below Represents Two Monopolists James and Jerry