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

A monopolist maximizes profit by producing the quantity where marginal revenue (MR) equals marginal cost (MC) and then charging the highest price consumers will pay for that quantity (reading price from the demand curve).

Relevant concepts:
- MR < Demand for a downward‑sloping demand curve; MR lies below the demand (D) curve.
- Profit maximization rule: choose Q such that MR = MC, then set P from D at that Q.
- Any other output/price pair that does not satisfy MR = MC is not profit maximizing.

Step‑by‑step reasoning using the diagram:
1. Locate the MR and MC curves. The intersection of MR and MC determines the monopolist’s profit‑maximizing output. In the diagram MR and MC meet at quantity Q1.
2. Having chosen Q1, move vertically up to the demand curve to find the price consumers will pay for Q1. That price on the vertical axis is P1.
3. Therefore the unregulated monopolist produces Q1 and charges P1.

Why the correct answer (D) is correct:
- D states price P1 and output Q1, exactly the combination determined by MR = MC and the demand curve in this figure. That is the textbook monopolist outcome.

Why the other choices are incorrect:
- A (a price above P3 and quantity less than Q3): This describes some arbitrary higher price/ lower quantity, but it does not come from the MR = MC rule shown in the diagram, so it is not the profit‑maximizing choice.
- B (price P3 and output Q3): That coordinate is not where MR = MC in the figure; it therefore is not the monopolist’s profit‑maximizing point.
- C (price P2 and output Q2): This pair also does not correspond to the MR = MC intersection shown; it might represent another benchmark (e.g., regulated or socially efficient output) but not the unregulated monopolist’s choice.

Conclusion: Applying MR = MC and then reading price from the demand curve yields P1 and Q1, so the correct answer is D.

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?

Suppose an unregulated electric company is a monopolist and faces demand of Q = 50 – 10P. If this company has zero marginal costs, its profit-maximizing price is

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