-The above figure shows the demand and cost curves facing a monopolist.The monopoly maximizes profit by setting price equal to
A) $100.
B) $200.
C) $300.
D) $400.

Question

-The above figure shows the demand and cost curves facing a monopolist.The monopoly maximizes profit by setting price equal to
A) $100. 
B) $200. 
C) $300. 
D) $400.

Quizplus · Accepted Answer

A monopolist maximizes profit where marginal cost equals marginal revenue, which is typically not shown directly on a graph with only demand and cost curves. However, the optimal output level is where these two curves intersect. The price is then determined by the highest price consumers are willing to pay for that quantity, which can be read from the demand curve. Without a visual, the most accurate assumption is that the monopolist will charge the highest price consumers are willing to pay for the quantity where marginal cost meets marginal revenue, which often results in a price above the marginal cost. Given the options and without a specific graph to analyze, the choice that suggests a higher price point, assuming it aligns with the demand curve's indication of consumer willingness to pay, would be correct.

-The Above Figure Shows the Demand and Cost Curves Facing