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

Quizplus · Accepted Answer

When marginal costs are zero, the profit- maximizing output for a monopolist is where marginal revenue equals zero (i.e., the monopolist produces the output level where demand is unit-elastic). In this case, it is at point Q2 where the MR curve intersects the x-axis. Therefore, the answer is (C) Q2.

Consider the Following AR and MR Curves for a Single-