Question

Refer to Figure 15-7. To maximize its profit, a monopolist would choose which of the following outcomes?

1. Q = 30 and P = 30



2. Q = 30 and P = 60



3. Q = 45 and P = 45



4. Q = 60 and P = 30

Answer 1

To maximixe its profit, a monopolist would choose Q = 45 and P = 45

When is profit maximized

Profit maximization occurs when a company or individual achieves the highest possible level of profit from their business operations or activities.

This point is typically reached when marginal cost (MC) equals marginal revenue (MR) in a perfect competition scenario, resulting in the most efficient allocation of resources.

In practical terms, profit maximization depends on various factors such as demand, production costs, market competition, and pricing strategies.

The point of equilibrium on the graph is where the profit has been maximized