Consider the following AR and MR curves for a single- price monopolist.
FIGURE 10- 2
-Refer to Figure 10- 2.If marginal costs were positive and constant but less than A,the profit- maximizing output for this single- price monopolist would be

Question

Consider the following AR and MR curves for a single- price monopolist.
  FIGURE 10- 2
-Refer to Figure 10- 2.If marginal costs were positive and constant but less than A,the profit- maximizing output for this single- price monopolist would be

Quizplus · Accepted Answer

The profit-maximizing output for a single-price monopolist occurs at the quantity where MR = MC. In this case, the marginal cost is less than the price (A), so the monopolist will produce some positive amount of output. Since the marginal revenue curve lies below the demand curve, the profit-maximizing output will be less than the output that maximizes total revenue (Q2). Therefore, the correct answer is that the profit-maximizing output is greater than zero but less than Q2, which is answer choice E.

Consider the Following AR and MR Curves for a Single-