Figure 11-6
-The profit-maximizing monopolist in Figure 11-6 will sell its output at

Question

Figure 11-6 -The profit-maximizing monopolist in Figure 11-6 will sell its output at A)P₁. B)P₂. C)P₃. D)P₄.

Quizplus · Accepted Answer

A profit-maximizing monopolist sets its output where marginal cost (MC) equals marginal revenue (MR) and then charges the highest price consumers are willing to pay for that quantity, which is found on the demand curve. This price is typically higher than the marginal cost, and in this context, it corresponds to P2.

Figure 11-6 -The Profit-Maximizing Monopolist in Figure 11-6 Will Sell Its Output