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 level of profit or loss?
A)$0.
B)Loss of $3.
C)Loss $25.2.
D)Profit of $12.
E)Profit of $60.

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 level of profit or loss?
A)$0. 
B)Loss of $3. 
C)Loss $25.2. 
D)Profit of $12. 
E)Profit of $60.

Quizplus · Accepted Answer

The socially optimum price occurs at the intersection of the supply and demand curves, where the price is $26 and the quantity sold is 7. At this price, the monopolist will have a total revenue of $182 ($26*7) and total cost of $207 ($9*7 + $12). Thus, the monopolist will incur a loss of $25.2 ($207 - $182). Therefore, the correct answer is (C).

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