Final answer:
A monopolist sets prices by finding where MR equals MC to determine the profit-maximizing quantity, and then reads the price off the demand curve for that quantity to maximize profits. The correct option is 'Set the quantity using MR = MC, and then read the price off the demand curve'. Other intersections are not relevant for this purpose.
The correct answer is option d. Set the quantity using MR = MC, and then read the price off the demand curve.
Step-by-step explanation:
To determine how a monopolist sets prices given a set of demand, marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves, they would follow a multi-step process. Firstly, the monopolist identifies the profit-maximizing level of output by setting the quantity where MR equals MC. This is crucial because it points to the level where producing one more unit doesn't add to overall profits. Once this quantity is determined, the monopolist then reads the price off the demand curve corresponding to that quantity. This price is not determined by the MC or ATC directly but is found on the demand curve itself, which represents the maximum price consumers are willing to pay for that specific quantity of goods. Consequently, the correct option from the ones provided is 'Set the quantity using MR = MC, and then read the price off the demand curve'. This ensures that the monopolist can maximize profits, with the area between price, average cost, and output representing the profit margin.
The incorrect options involve reading the price at intersections that do not pertain to profit maximization, such as the intersection of MC and ATC or the intersection of demand and ATC, which are not relevant to setting the profit-maximizing price for a monopolist.