Select the correct answer.

the graph represents price and output quantities under a monopoly. what price will the monopolist firm set?

a. $5
b. $10
c. $15
d. 20

The correct answer is C.

A monopoly is a market structure where a single firm serves the whole demand of a specific good or service. It does not face competitors, therefore, such firm has absolute market power to decide the price charged for its products.

So, the monopoly is able to charge a higher price than in a perfect competition scenario where the price would be set at the intersection betweeen the demand function and the marginal cost function.

Instead, the quantity sold in the monopoly (q*) is determined by the intersection of the marginal revenue and marginal cost curves, and the monopoly price is computed by substituting q* in the expression of the demand function (because the demand function relates price and quantity).

The result is 15$ as the picture shows.

by appointing the chair and a majority of the members