Chapter 61, Problem 1MCQ

To determine

Monopolist’s profit-maximizing output.

Answer to Problem 1MCQ

(b) 4.

Explanation of Solution

The monopolist’s profit-maximizing output level is 4 because, at this output level, the marginal revenue curve intersects the marginal cost curve is the monopolist’s profit-maximizing condition. Hence, option (b) is correct.

Economics Concept Introduction

Introduction:

There is a single seller in the monopolist market and a large number of buyers. Seller charge higher prices in the monopoly market than in the perfectly competitive market. Seller discriminates due to a lack of competition and information in the market with the consumer. A monopolist’s profit-maximizing output level takes place where marginal revenue equates to marginal cost.