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 price?

Question

Quizplus · Accepted Answer

To find the profit maximizing price, we need to use the formula MR = MC. 
So,

100 - Q = 5 
95 = Q

Now we can substitute Q into the demand equation to find the optimal price:
Q = 200 - 2P 
95 = 200 - 2P 
105 = 2P 
P = $52.50

Therefore, the profit maximizing price is $52.50 (choice C).

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