Figure 8.2 Figure 8.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8.2.What is the firm's profit-maximising price?

Question

Figure 8.2  Figure 8.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 8.2.What is the firm's profit-maximising price?

Quizplus · Accepted Answer

The profit-maximizing price is where marginal revenue (MR) equals marginal cost (MC). From the graph, we can see that the intersection of MR and MC occurs at point P3. Drawing a horizontal line from P3 to the demand curve gives us the corresponding price of P₃.

Figure 82 Figure 8