Use the following to answer question:
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.To maximize profits,Lenoia should charge a price of:
A)$350.
B)$400.
C)$450.
D)$500.

Question

Use the following to answer question: 
-(Table: Demand and Total Cost)Use Table: Demand and Total Cost.Lenoia runs a natural monopoly firm producing electricity for a small mountain village.The table shows Lenoia's demand and total cost of producing electricity.To maximize profits,Lenoia should charge a price of:
A)$350. 
B)$400. 
C)$450. 
D)$500.

Quizplus · Accepted Answer

To maximize profits, a firm should produce where marginal cost (MC) equals marginal revenue (MR). In a monopoly, the price is set above the MC, and the quantity is determined where MC equals MR. Without the table, we can't calculate the exact quantities and costs, but typically, the profit-maximizing price is higher than the marginal cost and is determined by the demand curve at the quantity where MC equals MR. Given the options and the typical behavior of a monopoly, a price of $400 might be a strategic choice for maximizing profits, assuming it aligns with the demand and cost structure provided in the missing table.

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