Consider the same monopoly situation as in the previous question. The monopoly price is
A)8
B)46
C)54
D)92

Question

Quizplus · Accepted Answer

The monopoly will set the price where MR=MC. From the table, we can see that the monopoly marginal cost is $42 when producing 3 units and is $66 when producing 4 units. Therefore, the point where MR=MC is where 54 units are produced, and the price is $54. At this point, the monopoly will maximize its profit by producing and selling 54 units at a price of $54, earning a profit of $540. Any other price point will either result in a lower quantity sold or a lower profit. Therefore, the best choice is C) 54.

Consider the Same Monopoly Situation as in the Previous Question