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 a 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 a single- price monopolist would be

Quizplus · Accepted Answer

The profit-maximizing output occurs where MC=MR. In this case, MR is the blue curve, so we look where it intersects with MC (the black line). Since MC is less than A but positive and constant, the intersection point will be to the right of Q2, but below the midpoint between Q2 and Q3. Therefore, the answer is greater than zero but less than Q2, which is option C.

Consider the Following AR and MR Curves for a Single-