Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.
-Refer to Figure 8-C.Given this information, the monopoly would prefer which of the following price and output combinations?

Question

Figure 8-C
The following diagram contains information on cost and revenue curves facing a regulated monopoly.

-Refer to Figure 8-C.Given this information, the monopoly would prefer which of the following price and output combinations?

Quizplus · Accepted Answer

The monopoly would prefer to produce output at Q = 12, where MR = MC. This corresponds to price point P = $28, which is intersecting with D curve. At this level of output, the total revenue earned by the monopoly is greater than the total cost incurred ($336 > $256), resulting in maximum profit for the firm. Therefore, the best choice for the monopoly is option B.

Figure 8-C The Following Diagram Contains Information on Cost and Revenue Curves