Asked by ERICA ROSENBAUM on Jul 15, 2024
Verified
Refer to Table 17-1. If Sydney and Matthew operate as a profit-maximizing monopoly in the market for water, what price will they charge?
A) $28
B) $24
C) $20
D) $32
Profit-Maximizing
A strategy or process aimed at increasing a company's profits to the highest possible level.
Marginal Cost
The increase in cost that arises from producing one additional unit of a good or service.
- Understand the optimal profitability strategies for enterprises within varying market scenarios.
Verified Answer
JL
Janneth LopezJul 16, 2024
Final Answer :
B
Explanation :
The profit-maximizing quantity for a monopoly is where marginal revenue equals marginal cost. Since the marginal cost is zero, they will maximize profit where total revenue is highest, which is at 540 gallons, corresponding to a price of $24 per gallon.
Learning Objectives
- Understand the optimal profitability strategies for enterprises within varying market scenarios.