69. Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging

A. a price above P3 and selling a quantity less than Q3.
B. price P3 and producing output Q3.
C. price P2 and producing output Q2.
D. price P1 and producing output Q1.

Question

69. Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging

A. a price above P3 and selling a quantity less than Q3.
B. price P3 and producing output Q3.
C. price P2 and producing output Q2.
D. price P1 and producing output Q1.

BlackTom AI · Accepted Answer

Monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC), so determine output from the MR = MC condition and then read the price from the demand curve.

1) Relevant knowledge points and concepts
- Profit maximization for a monopolist occurs at the quantity where MR = MC.
- The monopolist is a price-maker: after choosing the profit-maximizing quantity, it uses the demand curve to set the highest price consumers will pay for that quantity.
- Socially efficient or competitive outputs (where price = MC) are generally different from the monopolist’s choice.

2) Step-by-step reasoning process
- Locate the MR and MC curves on the diagram. Find their intersection point: that intersection determines the profit-maximizing quantity.
- On the diagram this MR = MC intersection corresponds to quantity Q3.
- From that quantity, move up vertically to the demand curve (D). The price consumers will pay at Q3 is P3.
- Therefore the monopolist produces Q3 and charges P3.

3) Intermediate steps shown
- Step: MR intersects MC → output = Q3.
- Step: At Q3, read price on demand curve → price = P3.
(No algebraic numbers are provided; the reasoning is graphical.)

4) Why the correct answer is correct
- The monopolist does not choose P2/Q2 or P1/Q1 because those quantities do not satisfy MR = MC. The correct profit-maximizing rule is MR = MC, and the diagram shows that rule yields Q3 and P3.

5) Why other options are incorrect
- A: “a price above P3 and quantity less than Q3” would imply producing where MR > MC (too little output), so the firm could raise profit by increasing output until MR = MC.
- C: P2 and Q2 correspond to a different intersection (likely where demand meets MC or some other point), not the MR = MC solution.
- D: P1 and Q1 are also not where MR = MC; choosing them would either leave profitable opportunities or reduce profit.

6) Conclusion
Applying the MR = MC rule and then using the demand curve to set price yields price P3 and output Q3, confirming option B.

类似问题

How does a monopoly firm determine its price?

How does a monopoly firm determine its price?

The figure below depicts a monopolist. In order to maximize profit, this monopolist will charge a price of

69. Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging A. a price above P3 and selling a quantity less than Q3. B. price P3 and producing output Q3. C. price P2 and producing output Q2. D. price P1 and producing output Q1.

The graph provided shows the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for a monopolist. If a regulatory agency requires that the monopolist set a price that earns the monopolist a normal profit, what price will the monopolist set?

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