Exhibit 9-7

-Consider Exhibit 9-7. What is the profit-maximizing output for a monopolist that does not price discriminate?

Question

Exhibit 9-7
 
-Consider Exhibit 9-7. What is the profit-maximizing output for a monopolist that does not price discriminate?

Quizplus · Accepted Answer

The profit-maximizing output for a monopolist is where marginal revenue equals marginal cost. In exhibit 9-7, the marginal cost is $4 for all units, and the marginal revenue for each unit is given by the demand curve. At an output of 3 units, the marginal revenue is $5, which is equal to the marginal cost. At any higher output level, the marginal cost would exceed the marginal revenue, leading to a decrease in profits. Therefore, the profit-maximizing output for a monopolist that does not price discriminate is 3 units.

Exhibit 9-7 -Consider Exhibit 9-7. What Is the Profit-Maximizing Output for a Profit-Maximizing