The figure below shows the total cost and total revenue curves for a monopolist. The profit-maximizing output for the monopolist is:
Figure 9.3

A)1 unit
B)2 units
C)3 units
D)4 units
E)5 units

Question

The figure below shows the total cost and total revenue curves for a monopolist. The profit-maximizing output for the monopolist is:​ ​
Figure 9.3

A)1 unit 
B)2 units 
C)3 units 
D)4 units 
E)5 units

Quizplus · Accepted Answer

The monopolist maximizes profit by producing the output level where marginal revenue (MR) equals marginal cost (MC). In the given figure, the MC curve intersects the MR curve at quantity Q=3. At this output level, the monopolist's total revenue (TR) equals $21, and the total cost (TC) equals $12, resulting in a total profit of $9. No other output level results in a higher profit. Therefore, the best choice for profit-maximizing output is 3 units.

The Figure Below Shows the Total Cost and Total Revenue