Question

Exhibit 10.5

Price 23 - ---- - - - - -- - 9 12 Quantin 15 MR Optimal output and price for the nondiscriminating monopolist in Exhibit 9-5 are 15 and $15 O 15 and $13 o 9 and $23 12 and $20 12 and $12

Exhibit 10.5 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor's profit-maximizing level of output is _____.

A) 137.5 units

B) 75 units

C) 125 units

D) 100 units

E) 150 units

Answer 1

12 and $20.

Explanation :

Firm maximises it's profit where MR equals MC. Here at quantity 12, MR equals MC. And charge price on the demand curve above where MR equals MC. So here on the demand curve above where MR equals MC price will be 20.