Figure 9.3 Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The price charged at the profit-maximising/loss-minimising output level is
A)$38
B)$54
C)$68
D)$75

Question

Figure 9.3  Figure 9.3 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.3.Suppose the monopolist represented in the diagram above produces positive output.The price charged at the profit-maximising/loss-minimising output level is
A)$38 
B)$54 
C)$68 
D)$75

Quizplus · Accepted Answer

The profit-maximizing level of output occurs where marginal revenue equals marginal cost, which is at a quantity of 7 in the diagram. At this quantity, the monopolist can charge a price of $68, which is found by going up from the intersection of the quantity of 7 with the demand curve to the corresponding price on the demand curve. Therefore, the answer is C) $68.

Figure 93 Figure 9