The monopolist's profit-maximizing price is $12, as it corresponds to the quantity where marginal revenue equals the constant marginal cost of $7. Here option C is correct.
To determine the monopolist's profit-maximizing price, we can use the concept of marginal cost and marginal revenue. The monopolist maximizes profit when marginal cost (MC) equals marginal revenue (MR).
Given that the marginal cost is constant at $7, we can analyze the marginal revenue associated with each quantity:
At quantity 1, the price is $15, so MR1 = $15 - $7 = $8.
At quantity 2, the price is $12, so MR2 = $12 - $7 = $5.
At quantity 3, the price is $9, so MR3 = $9 - $7 = $2.
At quantity 4, the price is $6, so MR4 = $6 - $7 = -$1.
At quantity 5, the price is $3, so MR5 = $3 - $7 = -$4.
The monopolist maximizes profit where MR equals MC. In this case, it occurs at quantity 2, where MR2 = $5 equals the constant MC of $7. Therefore, the profit-maximizing price is $12, making the correct answer (c) $12.
Complete question:
Quantity Price
1 $15
2 $12
3 $9
4 $6
5 $3
If the monopolist has a constant marginal cost for her product equal to $7, what is her profit-maximizing price?
a. $6
b. $9
C. $12
d. $15