Your food-services company has been named as the monopoly provider of meals at a small university.The cost and demand schedules are:
TABLE 10-2
-Refer to Table 10-2.For a single-price monopolist,the profit-maximizing price and number of meals per day is best approximated by

Question

Your food-services company has been named as the monopoly provider of meals at a small university.The cost and demand schedules are:
  TABLE 10-2
-Refer to Table 10-2.For a single-price monopolist,the profit-maximizing price and number of meals per day is best approximated by

Quizplus · Accepted Answer

To find the profit-maximizing price and quantity, we need to look for the point where marginal cost equals marginal revenue. In this case, the marginal cost is constant at $1.50 per meal, and the marginal revenue is given by the demand schedule.

We can see from the table that at a price of $2.12 per meal, the quantity demanded is 550. At this point, the marginal revenue also equals $2.12, which is equal to the marginal cost of $1.50. This means that the firm can increase profit by producing and selling 550 meals per day at a price of $2.12 per meal.

Any other price and quantity combination will result in lower profits for the monopolist. Therefore, the best choice is option B, 550 meals at $2.12 per meal.

Your Food-Services Company Has Been Named as the Monopoly Provider