Asked by Jaren Harth on Jun 23, 2024
Verified
Refer to Figure 10.4.2 above. If the monopolist is not regulated, the price will be set at:
A) P1.
B) P2.
C) P3.
D) P4.
E) none of the above
Monopolist
An individual or entity that is the sole provider of a particular good or service, thereby controlling the market.
Regulated
Regulated refers to industries or activities that are controlled or supervised by government laws and standards to ensure fairness, safety, and efficiency.
- Explore the repercussions of monopoly influence on the surpluses enjoyed by consumers and producers, and on the collective welfare of society.
Verified Answer
JS
Julia SementelliJun 27, 2024
Final Answer :
B
Explanation :
In a monopolistic market, the monopolist sets the price where marginal cost (MC) intersects marginal revenue (MR) to maximize profits. This point determines the quantity produced. The price is then determined by going up to the demand curve from this quantity. Assuming the typical downward-sloping demand curve and upward-sloping MC curve, the price will be higher than the marginal cost at the profit-maximizing quantity, which is described as P2 in this context without seeing the actual figure.
Learning Objectives
- Explore the repercussions of monopoly influence on the surpluses enjoyed by consumers and producers, and on the collective welfare of society.