The monopoly price is:
A)$30.
B)$23.
C)$15.
D)$8.

Question

Quizplus · Accepted Answer

The monopoly price is where marginal revenue equals marginal cost. From the given information, the marginal cost is $5. At a price of $30, the firm would have a quantity of 7 and therefore a marginal revenue of $7 (given the linear demand curve). At a price of $23, the firm would have a quantity of 12 and a marginal revenue of $3. Therefore, the price that maximizes profit for the monopolist is $23.

The Monopoly Price Is