Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The economically efficient output level is
A)600 units
B)800 units
C)940 units
D)1160 units

Question

Figure 9.9  Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.The economically efficient output level is
A)600 units 
B)800 units 
C)940 units 
D)1160 units

Quizplus · Accepted Answer

The economically efficient output level is where marginal cost (MC) equals marginal revenue (MR), which is at 940 units. At this output level, the price (P) is equal to the marginal cost (MC) at $10, and the monopolist earns a total profit of $3200. Any output level below or above this efficient level will result in a lower total surplus. Therefore, the best choice is C, producing 940 units for economic efficiency.

Figure 99 Figure 9