Monopoly Pricing: Maximizing Profit for Excalibur Internet
What is the profit maximizing quantity and price for Excalibur Internet?
1) 125 at $130
2) 250 at $100
3) 475 at $75
4) 625 at $40
5) 800 at $0
Final answer:
The profit-maximizing quantity for Excalibur Internet is 625 and the price is $40.
Reflecting on the data provided, the concept of monopoly pricing and profit maximization for Excalibur Internet becomes evident. By evaluating the different options presented, it is clear that the monopolist in this scenario will determine the quantity and price that will maximize their profit.
In the case of Excalibur Internet, the profit-maximizing quantity is 625 units at a price of $40. This particular combination results in the highest profit for Excalibur Internet, as it is the point where marginal revenue equals marginal cost, maximizing overall profitability.
Understanding the dynamics of monopoly pricing is crucial for businesses operating in monopoly markets. By strategically setting prices and quantities, firms can optimize their profits and gain a competitive edge in the market.
It is essential for monopolists like Excalibur Internet to carefully analyze demand, costs, and market conditions to determine the ideal quantity and price that will yield the highest profit. By mastering the concept of profit maximization, firms can thrive and succeed in the monopolistic market environment.