Refer to the Graph Shown

question 99

Multiple Choice

Refer to the graph shown. If this monopolist sets the price to maximize profit, it will charge:

• A) $16 for its product.
• B) $12 for its product.
• C) $8 for its product.
• D) $10 for its product.

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Definitions:

Profit-Maximizing Output

The level of production at which a company can achieve the highest level of profit based on its costs and the market price.

Profit-Maximizing Price

The price at which a company can sell its product or service to maximize its profit, considering demand and cost.

Demand Curve

A graph that shows the relationship between the price of a good and the quantity of that good consumers are willing to purchase at various prices.

Natural Monopolist

A natural monopolist is a single supplier in a market that can produce the total quantity of a good or service demanded at a lower cost than if there were multiple suppliers, due to high fixed costs and economies of scale.