Scenario 10.2:
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product:
Q = 200 - 2P
MR = 100 - Q
TC = 5Q
MC = 5
-Refer to Scenario 10.2. What is the profit maximizing level of output?

Question

Quizplus · Accepted Answer

To find the profit-maximizing level of output, we need to find the quantity where marginal revenue equals marginal cost.

MR = 100 - Q

MC = 5

Setting MR = MC:

100 - Q = 5

Q = 95

So the profit-maximizing level of output is 95 units.

Scenario 10.2: A Monopolist Faces the Following Demand Curve, Marginal Revenue Curve