The following table gives the cost and demand data for a monopolist:

-Refer to the above information to answer this question.Suppose that the monopolist is regulated and forced to charge a socially optimum price.What will be the price and output?
A)$85 and 4.
B)$80 and 5.
C)$75 and 6.
D)$70 and 4.
E)$65 and 8.

Question

The following table gives the cost and demand data for a monopolist:
 
-Refer to the above information to answer this question.Suppose that the monopolist is regulated and forced to charge a socially optimum price.What will be the price and output?
A)$85 and 4. 
B)$80 and 5. 
C)$75 and 6. 
D)$70 and 4. 
E)$65 and 8.

Quizplus · Accepted Answer

The socially optimum price is where the price equals marginal cost. In this scenario, the price of $75 and output of 6 units is likely where the monopolist's marginal cost equals the price, achieving allocative efficiency.

The Following Table Gives the Cost and Demand Data for a Monopolist