Figure 10-2 Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Question

Figure 10-2  Figure 10-2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 10-2.Suppose the monopolist represented in the diagram above produces positive output.What is the price charged at the profit-maximizing/loss-minimizing output level?

Quizplus · Accepted Answer

In a monopoly, the profit-maximizing output level is where marginal cost (MC) equals marginal revenue (MR). The price is then determined by the demand curve at this output level. In the diagram, this corresponds to a price of $68.

Figure 10-2 Figure 10-2 Above Shows the Demand and Cost