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Homework answers / question archive / 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
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
Let us compute the markup. The formula is:
Based on the information given, the marginal cost is $4 and the price is $9.
Therefore, the mark-up is C. 2.25.