Suppose the accompanying table describes the relationship between price and quantity demanded for a monopolist.
$$\begin{array} { | c | c | }
\hline \text { Quntity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ________.

Question

Suppose the accompanying table describes the relationship between price and quantity demanded for a monopolist.  
$$\begin{array} { | c | c | } 
\hline \text { Quntity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ________.

Quizplus · Accepted Answer

The socially optimal level of output is where the price equals the marginal cost. In the table, the price equals the marginal cost of $5 at 6 units.

Suppose the Accompanying Table Describes the Relationship Between Price and Quantity