Question 7
Market StructuresThe diagram above represents the short-run position of a monopolist. The profit-maximizing output is
- A.Q3
- B.Q4
- C.Q1
- D.Q2
Show the answer and explanation
Answer: D (Q2)
Explanation
Use the diagram. A monopolist maximises profit where marginal revenue equals marginal cost; the MR line cuts the MC curve at output Q2.