Table 14-6
A monopolist faces the following demand curve:

-Refer to Table 14-6.If the monopolist has a constant marginal cost for her product equal to $7,what is her profit-maximizing price?
A) $6
B) $9
C) $12
D) $15

Question

Table 14-6
A monopolist faces the following demand curve:
 
-Refer to Table 14-6.If the monopolist has a constant marginal cost for her product equal to $7,what is her profit-maximizing price?
A) $6 
B) $9 
C) $12 
D) $15

Quizplus · Accepted Answer

In order to maximize profit, the monopolist should set marginal revenue equal to marginal cost. From the table, we can see that the marginal revenue for each unit sold is decreasing. At a quantity of 5, the marginal revenue is equal to $7. This means that the monopolist should produce and sell 5 units at a price of $12 each in order to maximize profit.

Table 14-6 A Monopolist Faces the Following Demand Curve