Table 10.5,which is data for a monopolist.

-Refer to Table 10.5 to answer this question.What would be the output and price if this firm was regulated and required to charge a fair-return price?

Question

Table 10.5,which is data for a monopolist.
 
-Refer to Table 10.5 to answer this question.What would be the output and price if this firm was regulated and required to charge a fair-return price?

Quizplus · Accepted Answer

A fair-return price for a monopolist is where price equals average total cost (ATC). Looking at the table, we can see that ATC equals $12 when output is 5. Therefore, if the firm is regulated to charge a fair-return price, it will produce 5 units of output and charge a price of $60 (which is equal to ATC at that level of output). Therefore, the correct answer is C.

Table 10.5,which Is Data for a Monopolist