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How do you find the profit maximizing PRICE (not level of output) on a graph for...

How do you find the profit maximizing PRICE (not level of output) on a graph for a monopoly with demand, marginal revenue, marginal cost, and average total cost curves.

Find the point where MR = MC and go straight over to the price axis.
Find the point where demand hits marginal cost and go straight over to the price axis.
Find the point where MR = MC, go straight up until you hit the demand curve, and then go straight over to the price axis.
Find the minimum point on the ATC curve and go straight over to the price axis.

Solutions

Expert Solution

Correct Answer:

C

It is the method to identify the price level at the profit maximizing output level.

Rahul Sunny answered 2 years ago
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