Answer:
The monopolist should charge $2000.
Explanation:
The cost of producing rug is $600.
Suppose the total population is 100N.
At the price $1000, the profit to seller will be
= TR - TC
= [tex]\$ 1000\ \times\ 100 - \$ 600\ \times\ 100[/tex]
= $100,000 - $60,000
= $40,000
At the price $2000, the profit to seller will be
= TR - TC
= [tex]\$ 2000\ \times\ 40 - \$ 600\ \times\ 40[/tex]
= $80,000 - $24,000
= $56,000
The seller will be having higher profit at price $2000, so he should charge $2000 as price of rug.
