If a monopolist is producing the profit maximizing output level and at this output level, the marginal cost is $4 and the profit maximizing price is $9, what is the markup? A

Marketing Jan 11, 2021

If a monopolist is producing the profit maximizing output level and at this output level, the marginal cost is $4 and the profit maximizing price is $9, what is the markup?

A. 2

B. 5

C. 2.25

D. 0.22

Expert Solution

Let us compute the markup. The formula is:

Marginal cost x Mark-up = Price
Mark-up = Price / Marginal cost

Based on the information given, the marginal cost is $4 and the price is $9.

Mark-up = $9 / $4 = $2.25

Therefore, the mark-up is C. 2.25.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote