Refer to Table 15-1. At what price will the monopolist maximize profit?

• A. \$12
• B. \$10
• C. \$8
• D. \$6

Answer: (B)

Verified step by step guidance

1. Identify the relevant data from Table 15-1, which should include quantities, prices, total revenue, and total cost or marginal cost for the monopolist.
2. Calculate the marginal revenue (MR) for each quantity level. Marginal revenue is the change in total revenue when one more unit is sold, and can be found using the formula: \(MR = \Delta TR / \Delta Q\).
3. Determine the marginal cost (MC) for each quantity level, which is the change in total cost when producing one more unit: \(MC = \Delta TC / \Delta Q\).
4. Find the quantity where marginal revenue equals marginal cost (\(MR = MC\)). This is the profit-maximizing output level for the monopolist.
5. Look up the price corresponding to this profit-maximizing quantity from the demand curve or price column in the table. This price is where the monopolist maximizes profit.