Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the maximum profit the monopoly can earn?

A) $4,800
B) $5,600
C) $6,000
D) $8,400

Question

Eddie Sweet · Accepted Answer

Final Answer : C, Explanation :  To find the maximum profit, we need to calculate the profit at each price point and choose the highest. Profit is calculated as (Price - Cost) * Quantity. The cost is given as $1 per unit. The profit at each price point is as follows:- At $4.00: Profit = ($4.00 - $1) * 2,000 = $6,000- At $3.50: Profit = ($3.50 - $1) * 2,400 = $6,000- At $3.00: Profit = ($3.00 - $1) * 2,800 = $5,600- At $2.50: Profit = ($2.50 - $1) * 3,200 = $4,800- At $2.00: Profit = ($2.00 - $1) * 3,600 = $3,600- At $1.50: Profit = ($1.50 - $1) * 4,000 = $2,000- At $1.00: Profit = ($1.00 - $1) * 4,400 = $0The maximum profit is $6,000, which occurs at a price of $4.00.

Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the maximum profit the monopoly can earn?

A) $4,800
B) $5,600
C) $6,000
D) $8,400

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Learning Objectives

Related questions

Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the maximum profit the monopoly can earn?A) $4,800B) $5,600C) $6,000D) $8,400

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Table 13.1. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $1 per unit of providing the product, what is the maximum profit the monopoly can earn?

A) $4,800
B) $5,600
C) $6,000
D) $8,400