Suppose the table below describes the relationship between price and quantity demanded for a monopolist. $$\begin{array} { | c | c | }
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ______.

Question

Suppose the table below describes the relationship between price and quantity demanded for a monopolist. $$\begin{array} { | c | c | } 
\hline \text { Quantity } & \text { Price } \
\hline 1 & \$ 10 \
\hline 2 & \$ 9 \
\hline 3 & \$ 8 \
\hline 4 & \$ 7 \
\hline 5 & \$ 6 \
\hline 6 & \$ 5 \
\hline 7 & \$ 4 \
\hline 8 & \$ 3 \
\hline
\end{array}$$ If the marginal cost of producing each unit of output is $5, then the socially optimal level of output is ______.

Quizplus · Accepted Answer

The socially optimal level of output occurs where price equals marginal cost. At 6 units, the price is $5, which equals the marginal cost.

Suppose the Table Below Describes the Relationship Between Price and Quantity