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Figure: Monopolist 3
-(Figure: Monopolist 3) In this figure, the profit-maximizing monopolist sells:
A) 9 units of output at $11 per unit.
B) 16 units of output at $4 per unit.
C) 9 units of output at $20 per unit.
D) 18 units of output at $2 per unit.

Question

Use the following to answer questions:
Figure: Monopolist 3 
-(Figure: Monopolist 3) In this figure, the profit-maximizing monopolist sells:
A) 9 units of output at $11 per unit. 
B) 16 units of output at $4 per unit. 
C) 9 units of output at $20 per unit. 
D) 18 units of output at $2 per unit.

Quizplus · Accepted Answer

The profit-maximizing monopolist will produce the quantity of output where marginal revenue equals marginal cost. In this case, marginal revenue is $11 and marginal cost is $9, so the profit-maximizing monopolist will produce 9 units of output. The monopolist will then set the price at $20 per unit, which is the highest price that consumers are willing to pay for 9 units of output.

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