Figure 9.9 Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.At the profit-maximising quantity, the difference between the monopoly's price and the marginal cost of production is
A)$8
B)$11.50
C)$21
D)There is no difference.

Question

Figure 9.9  Figure 9.9 shows the demand and cost curves for a monopolist.
-Refer to Figure 9.9.At the profit-maximising quantity, the difference between the monopoly's price and the marginal cost of production is
A)$8 
B)$11.50 
C)$21 
D)There is no difference.

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing quantity is where marginal revenue equals marginal cost. The price is determined by the demand curve at this quantity, which is typically higher than the marginal cost, resulting in a price-cost margin.

Figure 99 Figure 9