Suppose a private monopolist is supplying a good that is nonrival but excludable. The market demand for the good is P = 24 - 3Q. If the marginal cost of providing this good is zero, but the firm charges $18, then the monopolist will provide ________ units, and the efficient number of units is ________.

Question

Quizplus · Accepted Answer

From the demand curve, we can see that at a price of $18, the monopolist will sell 2 units, but the optimal level of output occurs when the marginal benefit of the good is equal to zero (its marginal cost). From the demand curve, we can see that this occurs when Q = 8.

Suppose a Private Monopolist Is Supplying a Good That Is