In Figure 24.2, a profit-maximizing monopolist will charge a price of
A) $6.40.
B) $4.70.
C) $4.00.
D) $5.50.

Question

In Figure 24.2, a profit-maximizing monopolist will charge a price of
A) $6.40. 
B) $4.70. 
C) $4.00. 
D) $5.50.

Quizplus · Accepted Answer

In a monopolist market, price and quantity are determined by the intersection of the marginal revenue (MR) and marginal cost (MC) curves. In the given figure, the MC curve intersects the demand curve (AR) at a quantity of 8, which is the profit-maximizing quantity. At this quantity, the MR is equal to $5.50. Therefore, a profit-maximizing monopolist will charge a price of $5.50. Thus, the correct answer is option D.