Exhibit 10-9
-Refer to Exhibit 10-9. For a profit-maximizing monopoly, its price is at point ____ while its marginal cost is at point ____.
A)F; A
B)A; F
C)A; A
D)D; F
E)A; C

Question

Exhibit 10-9 
-Refer to Exhibit 10-9. For a profit-maximizing monopoly, its price is at point ____ while its marginal cost is at point ____.
A)F; A 
B)A; F 
C)A; A 
D)D; F 
E)A; C

Quizplus · Accepted Answer

A profit-maximizing monopoly chooses a quantity where marginal revenue (MR) equals marginal cost (MC) and sets the price based on the demand curve at that quantity. In Exhibit 10-9, point A represents the quantity where MR=MC, and point F represents the price based on the demand curve at that quantity. Therefore, the monopoly's price is at point F, and its marginal cost is at point A. The correct answer is B.

Exhibit 10-9 -Refer to Exhibit 10-9. for a Profit-Maximizing Monopoly, Its Price