Scenario 14-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q.The monopolist's marginal revenue curve can be expressed as MR=90-2Q.The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 14-4.The profit-maximizing monopolist will produce an output level of

Question

Quizplus · Accepted Answer

To find the profit-maximizing output level, the monopolist should produce where marginal revenue (MR) equals marginal cost (MC). In this case, we know that MC is constant at $10.

Setting MR equal to MC:

90 - 2Q = 10
80 = 2Q
Q = 40 units

So the monopolist should produce 40 units to maximize profits.

Scenario 14-4 Suppose a Monopolist Has a Demand Curve That Can Be